S&P 500, Dow Jones Forecast: Risk-Taking Cut Back Ahead of FOMC
The S&P 500, Dow Jones and the FTSE have been hit hard recently by financial turmoil and economic uncertainty. Some financial commentators are advising investors to take a hard look at their risk appetite before making a move on the stock market.
In a speech at the Harvard Business Review, the CEO of Morgan Stanley, James Gorman, cited the FOMC’s statement as one of the reasons why markets are struggling. Gorman wrote that the statement, coupled with a weak economic report from the U.S. Commerce Department, meant investors needed to reassess their risk tolerance. He said that many investors had taken a “risk-taking” attitude in the past.
“Investors should be prepared for this type of behavior in the future when it comes to the stock market, Gorman said. If the economy does not improve substantially over the next few months, many investors will want to pull out of the market and look for higher return yields. Gorman added that the market’s recent surge may be short-lived. He added that this was why investors should be very careful in choosing stocks.
The market may experience a short period of volatility, Gorman said, but a sustained period of low volatility is not expected. He said this means investors will be able to ride out the volatility and weather the storm. However, the longer the market remains volatile, the more difficult it will be for traders to make accurate decisions. Gorman warned that investors who have been waiting for a lower price to buy stocks now may need to wait even longer to get the returns they need.
The fact that the FOMC’s actions are a warning to investors is not the only thing to be concerned about, Gorman said. The fact that the U.S. government is actively intervening in the market is also cause for concern. Gorman noted that previous government interventions, such as the mortgage meltdown and the collapse of financial institutions like Lehman Brothers, did not result in any positive effect. On the contrary, investors lost millions of dollars and the government ended up being forced to bail out these institutions.
Gorman added that investors should not be surprised if the current stock market situation turns sour. In the past, the U.S. government has always intervened and forced companies to merge with other financial institutions. This is something investors should expect in the near future as well.
Gorman concluded his speech by saying that investors must be patient and not expect a drastic change in the direction of the stock market. It may take some time for the market to recover from the recent downturn, but he added that the market would eventually stabilize and the U.S. economy will begin to move back to its previous growth rate. He pointed out that the market’s current volatility is not unlike what the economy experienced during the last major recession.
Gorman’s speech is timely, given the fact that he delivered it right before the Federal Reserve released their statement on the stock market. The release included a number of economic indicators, including unemployment rates and retail sales figures. Gorman noted that the unemployment rate is beginning to come down, and he said he expects this trend to continue. In fact, he predicted that unemployment could begin to come down as early as July.
In addition, Gorman indicated that the stock market is likely to continue to rise. rebound on its current trend, which means investors should expect to see the market reach another all-time high. in the next few months.
The FOMC’s actions could either spur or deter investors from buying stocks. Either way, the market will probably continue to be volatile, Gorman said. However, the good news is that investors can ride out the turbulence and stay safe while waiting for the stock market to return to its previous growth level.
The FOMC’s actions and warnings should motivate investors to keep their emotions in check and not be afraid to take a risk when making investments. Investors should also consider the impact that the FOMC’s actions will have on the economy, and whether or not they want to take more risk by buying stocks ahead of time.