The Conference Board’s recent monthly household survey showed that expectations for the stock market are at a near 40-year high. However, the divergence between those expecting stocks to rise and those expecting a decline is the largest since the financial crisis, potentially signaling a contrarian indicator.
What we do know from fund flows is that U.S. households are holding as much equity as ever, limiting upside potential, and many of the gains in the S&P 500 are coming from a limited number of companies, raising concerns about market breadth.
The Fed’s decisions on interest rates and its messaging are crucial. Any signs of a pause or hawkish comments could add to the bearish sentiment.
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