The U.S. economy is estimated to register diminished growth rates in 2022 due to record high inflation and soaring energy prices. Many expect inflation to remain high despite the possibility of aggressive interest rate hikes because of rising sanctions on Russia and soaring energy prices. Oil and gas prices are on the rise due to poor productivity. These factors have significantly dampened investor sentiment lately, as evident from the SPDR S&P 500 Trust ETF’s (SPY) 5.8% decline over the past three months.
Fears of a future recession cannot be ruled out. Deutsche Bank Securities Chief U.S. Economist, Matthew Luzzetti, predicts a recession to come by the next fiscal. Thus, fundamentally weak and overvalued stocks might witness a pullback in the near term.
