Don’t count your chickens, they say, at least not until they’ve hatched. That’s something the stock market keeps forgetting every time it rallies into a Federal Reserve pivot that remains a long way from happening.
For the early part of this past week, a bad-news-is-good-news mentality ruled as each “disappointment” was greeted with a surge. Fueled by data showing softer manufacturing activity and a sharp decline in job openings, the S&P 500 put together a 5.7% jump on Monday and Tuesday—the index’s largest two-day gain since April 2020, when stocks were in the early innings of the rebound from the Covid-19 bear-market low. And why not? A weaker economy and a slowing labor market could mean slower inflation and thus fewer rate hikes from the Fed.