Ed Yardeni, founder of Yardeni Research: “We now are raising the odds of a recession from 30% to 40%.”
The stock market ended its multiweek losing streak, and like a sports team that finally got a win, it’s worth celebrating. It just doesn’t mean the team—or this stock market—is any good.
Still, it was quite the relief when the market finally managed to string together a few good days, enough for the
Dow Jones Industrial Average
to gain 6.2% for the week, ending an eight-week losing streak. After seven long weeks of declines, the
S&P 500 index
rose 6.6%, and the
climbed 6.9%. And that was reason enough for optimism.
“Stocks finally enjoyed a strong bounce this week,” writes Canaccord Genuity analyst Martin Roberge. “Simply said, just like a rubber band that was stretched too much, pessimism forces are being worked off, hence the snapback rally.”
It’s also simply exhaustion. Stocks can’t fall forever, even if it sometimes feels like they will. And the market gave investors enough reasons to at least relax. It started with
(ticker: JPM) investor day—one that was far more upbeat than you’d expect, given all the recent recession fears—and ended with a moderated rise in the core personal consumption expenditure index that suggested, perhaps, that inflation had peaked.
But those were all sideshows compared with the real narrative changer—the release of the minutes from the May Federal Open Market Committee meeting on Wednesday. The Federal Reserve committed itself to half-point rate increases in June and July, but left open the possibility of smaller hikes—or none at all—from there. By the end of the week, the chances that the federal-funds rate would hit 3% by the end of…