The stock market has been on a wild ride since the beginning of this year due to macroeconomic and geopolitical headwinds. While the benchmark indexes witnessed a solid recovery in July thanks to better-than-expected corporate earnings and favorable economic data, the market’s prospects look bleak again. The red-hot July jobs report has raised concerns over the elevated inflation lingering longer, which could affect the Fed’s upcoming interest-rate increases.
According to BofA's Michael Hartnett, “the stock market is poised to hit new lows later this year following July's hot job report because inflation is likely to linger and the Fed will be forced to continue tightening financial conditions.” Hartnett expects the S&P 500 to trade below 3,600, representing a potential downside of 13% from the current level.
