Premarket stocks: Markets are climbing a wall of worry from
But to keep advancing, stocks will need to surmount a lengthening list of anxieties simmering under the surface that threaten to curtail the year’s spectacular run.
“We’ve been in the camp that we’re overdue for a correction, something in the 5-10% range that is a buyable pullback,” said Cliff Hodge, chief investment officer at Cornerstone Wealth.
This may not be the week. Bespoke Investment Group has highlighted the prevalence of “turnaround Tuesdays,” observing that after Monday losses of 1.5% or more, the following trading session has “much more frequently led to gains of more than 1% than losses of more than 1%.”
Evergrande: Attention on Monday focused on Evergrande, the Chinese conglomerate battling a debt crisis. Should the company default on its massive liabilities, there are fears it could spark a “Lehman moment,” in which the collapse of a single entity ricochets throughout the financial system.
Growth: The Evergrande saga could weigh on China’s property sector, a key engine of growth, at a time when the world’s second largest economy is already stalling.
Inflation: The Organization for Economic Cooperation and Development upgraded its inflation forecast for 2021 and 2022 on Tuesday. It now predicts that consumer inflation across G20 countries will sit at 4.5% at the end of this year before easing slightly to 3.5% by the end of next year — still much higher than the long-term trend.
“Supply pressures should fade gradually, wage growth remains moderate and inflation expectations are still anchored, but near-term risks are on the upside,” the OECD said in its report.
The Fed: The most immediate concern…
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