{"id":13700,"date":"2025-03-31T20:22:53","date_gmt":"2025-03-31T20:22:53","guid":{"rendered":"https:\/\/zacksim.com\/blog\/?p=13700"},"modified":"2025-05-12T14:37:50","modified_gmt":"2025-05-12T14:37:50","slug":"why-falling-expectations-and-volatility-may-be-bullish","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/why-falling-expectations-and-volatility-may-be-bullish\/","title":{"rendered":"Why Falling Expectations And Volatility May Be Bullish"},"content":{"rendered":"\n

Expectations are Falling and the Stock Market is Volatile. That\u2019s Bullish.<\/strong><\/p>\n\n\n\n

Consumer sentiment is in decline, inflation expectations are rising, small business confidence is sagging, and recession calls are growing. In the short term, this swirling uncertainty has almost certainly been the driver of market volatility. But in the long term, I think it could be bullish.<\/p>\n\n\n\n

First, allow me to frame the various\u2014and quite widespread\u2014declines in sentiment and growth expectations.<\/p>\n\n\n\n

Let\u2019s start with the most critical component of the U.S. economy, the consumer. In March 2025, U.S. consumer sentiment experienced a significant decline of -11%, reaching its lowest point in nearly two and a half years. The University of Michigan’s Consumer Sentiment Index dropped to 57.9 from February’s 64.7, which was well below expectations and was accompanied by a sharp increase in long-term inflation expectations (see chart below).1<\/sup><\/p>\n\n\n\n

University of Michigan: Inflation Expectations<\/em><\/strong><\/p>\n\n\n\n

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Source: Federal Reserve Bank of St. Louis2<\/sup><\/em><\/strong><\/figcaption><\/figure>\n\n\n\n

Rising Volatility and Recession Concerns\u2014What\u2019s Next for Stocks?<\/a><\/u><\/strong><\/p>\n\n\n\n

Consumer confidence is slipping, inflation expectations are rising, and recession concerns are growing. With market volatility back in focus, what\u2019s next for investors?<\/p>\n\n\n\n

Our exclusive March Stock Market Outlook Report3<\/sup><\/a><\/u><\/em><\/strong> breaks down the key economic shifts and what they mean for stocks. Get expert insights and strategies to navigate what\u2019s ahead.<\/p>\n\n\n\n