Despite the strengthening economy and steady corporate fundamentals, the growing concerns over economic growth, political headwinds and rising interest rates have all contributed to uncertainty ahead, with the sharp pullback this week revealing the potential volatility investors will have to face.
“Unlike 2016, there are no more tax cuts to salivate over and the deregulation momentum is going to now slow, or maybe stall, in the House,” David Rosenberg, chief economist and strategist at Gluskin Sheff, said in a note. “Rare is the day when the stock market goes down in the lead-up to Thanksgiving – and if it does, that indeed will be a very bearish signal.”
Nevertheless, there are some that remain hopeful of a turnaround. GDP continues to strengthen and the fourth quarter is likely to produce U.S. economic growth of around 3%, which is consistent with the full year. The employment numbers remain robust with wage growth on the rise. Many still trust the Federal Reserve will step in if things get too bad. Investors would then have to monitor short-term volatility that could trump the long-term growth trends.
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