Stocks are trying to adjust to a macroeconomic outlook that looks different today than it did in January. Inflation is down from its peak 2022 levels, but it has settled well above the Federal Reserve’s preferred 2% target, and oil prices are sending it higher. Interest rates have followed, staying elevated relative to the zero-bound era.
However, GDP growth remains nominally strong, and the labor market keeps surprising to the tight side. All of this means that investors are accepting that the cost of money isn't returning to 2019 levels anytime soon.
