All 30 Dow stocks were lower, and only 25 of the stocks in the blue chip S&P 500 index traded higher Monday.
Stocks also slumped Friday as the market snapped a four-week winning streak. The markets have rebounded in July and August following a brutal first half of 2022. But the pendulum may be swinging back to pessimism.
That’s led more market watchers to predict that the Fed may remain aggressive with rate hikes for the foreseeable future. The odds of another 75 basis point hike versus a half-point increase are now seen as about 50-50.
“Market expectations for what the Fed will do has a track record of flipping based on economic data,” said Lindsey Bell, chief money and markets strategist for Ally Invest, in a report Monday. “As long as the Fed is in the driver’s seat, volatility is likely to remain elevated and the market will remain reactionary.”
“This has been more like a bull rally in a bear market,” Oktay Kavrak, director of product strategy at Leverage Shares, said about what’s happened with stocks in the past few weeks. “Recession is still a base case and inflation remains stubbornly high. This could be one of those years where the market remains choppy.”