In today\u2019s Steady Investor, we are taking a deeper dive into key factors that we believe are impacting this bear market and what\u2019s to come, such as:<\/p>\n\n\n\n
The Federal Reserve is More Concerned About Inflation Than Recession \u2013 <\/strong>In comments made this week by Federal Reserve Chairman Jerome Powell, he made it clear that the Fed would rather curb inflationary pressures than protect the economy against potential recession. This line of thinking harkens back to the era of Fed Chairman Paul Volcker, who intentionally (and famously) tipped the U.S. into a recession in the early 1980s by raising rates into double-digit territory to tamp down 1970s inflation. Some of the Fed\u2019s work today is cosmetic, in our view \u2013 they want to give the appearance that they are fighting inflation when in reality inflation is largely a supply-driven issue. The Fed may be concerned that higher prices will change consumer psychology into expecting future inflation, which could be self-fulfilling. We see a distinct possibility that later in the year supply issues tied to the war, China lockdowns, and pandemic backlogs still being worked through could ease inflation pressure as the Fed is raising rates, giving the appearance that the Fed\u2019s plan is working.1<\/sup><\/p>\n\n\n\n ____________________________________________________________________________<\/p>\n\n\n\n How Can You Survive a Potential Bear Market?<\/u><\/strong> Don\u2019t despair! You can potentially avoid the most harmful hazards of a bear market on your investments by making use of some useful tools I offer in our free guide – The Zacks Bear Market Survival Kit<\/em>.2<\/sup><\/p>\n\n\n\n This guide discusses some key tools to prepare for a bear market, including:<\/p>\n\n\n\n In this guide, you\u2019ll get our viewpoint on the most important moves you can make to weather a recession. Don\u2019t wait\u2014if you have $500,000 or more to invest, get this guide before the storm hits. ____________________________________________________________________________<\/p>\n\n\n\n U.S. Consumer Spending Ticks Higher, but at a Slower Pace \u2013 <\/strong>Americans are still out spending in the U.S. economy but at a slower overall pace. In May, consumer spending rose by a seasonally adjusted 0.2%, the slowest pace of increase in 2022 but still a sign that households are hanging on. Personal incomes grew by 0.5% in May, which was consistent with April\u2019s increase but failed to keep pace with inflation. Once adjusted for inflation, personal after-tax income fell by 0.1% in May, which can be a hindrance to overall spending. Retail sales fell for the first time this year, but largely as consumers continue to shift spending from goods to services. Orders for long-lasting durable goods like refrigerators, cars, and washing machines continued to increase, rising 0.7% in May and marking the 7th<\/sup> increase in eight months. Orders for nondefense capital goods, which is a good indicator for business investment, also ticked higher by 0.5% in May. The housing market continues to be resilient as well, as the number of U.S. houses that went under contract also rose. As likely expected, consumers pulled back at the pump, with gasoline sales falling 8.2% compared with the same week last year.3<\/sup><\/p>\n\n\n\n Meanwhile, Consumer Sentiment Falls to All-Time Lows \u2013 <\/strong>Even as consumers spend slightly more and experience higher wages \u2013 within one of the strongest labor markets in decades \u2013 their attitudes about the U.S. economy continue to darken. The University of Michigan\u2019s Consumer Sentiment Index, which is a bellwether for how consumers feel about the U.S. economy, fell this month to its lowest point ever. This reading is one of the key reasons we believe the bear market may not have much further to go \u2013 consumers feel worse today than they did during the depths of the Great Recession when millions lost their homes and the jobless rate was approaching double digits. The bar for the U.S. economy is arguably as low as it can be, meaning even slightly better than expected data could fuel a stock market rally, in our view.4<\/sup><\/p>\n\n\n\n With the sudden market changes we\u2019ve witnessed over the past few weeks, investors may wonder if we could potentially reach the bear market territory.<\/p>\n\n\n\n It\u2019s important to remember that inflation and volatility are a natural (if unpleasant) part of the economic cycle. Still, you can potentially avoid the most harmful hazards of a bear market on your investments by making use of some useful tools we offer in our free guide, The Zacks Bear Market Survival Kit<\/a><\/strong><\/em>.5 <\/sup>This guide discusses some key tools to prepare for a bear market, including:<\/p>\n\n\n\n If you have $500,000 or more to invest, get our free guide today. You\u2019ll get our viewpoint on the most critical moves you can make to weather a recession. Don\u2019t wait\u2014get this guide before the storm hits.<\/p>\n","protected":false},"excerpt":{"rendered":" Fed chairman indicates more concern about inflation than recession, U.S. consumers still spending but sentiment at all-time lows <\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[71,73],"tags":[],"class_list":["post-11795","post","type-post","status-publish","format-standard","hentry","category-private-client-group","category-steady-investors-week"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/11795","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=11795"}],"version-history":[{"count":4,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/11795\/revisions"}],"predecessor-version":[{"id":11799,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/11795\/revisions\/11799"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=11795"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=11795"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=11795"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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High inflation and market volatility concerns come with a lot of worries from investors about how to manage their investments if the market reaches bear market territory.<\/p>\n\n\n\n
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The Zacks Bear Market Survival Kit2<\/sup><\/strong><\/a><\/u><\/p>\n\n\n\n