There is more than enough focus on Wall Street about what the Fed will do next, and Friday’s weak nonfarm payrolls report will add to expectations for a rate cut. But maybe there is not enough planning among investors about what they should do to preserve the hefty gains embedded in market portfolios since the April low gave way to a new S&P 500
record. A rate cut is typically seen as a good thing for stocks, but a weakening labor market is also a sign that broader trouble for the economy could be ahead.
Global equities are at all-time highs, 401(k) and IRA millionaire account numbers have surged to their own record, flows into equity ETFs are picking up, and investor sentiment data is getting “a little hotter,” according to Strategas Securities’ technical strategist Todd Sohn, all signs that there could be a tipping point ahead for the market where bullishness becomes its own sign of overconfidence. But in Sohn’s view, we’re not there yet. September has had some rocky trading days already, and its long-term track record as a market month going back decades is not good, but “the real lull,” if it comes, will happen further into Q4, he said.
“That’s when people can get hit with a speed bump like April, maybe not as quick or as big of a drawdown,” Sohn shared on this week’s “ETF Edge.” But he stressed that there are “no signs of massive risk yet.”
