I’m back from my overseas break, and the first thing I checked on returning was Wall Street. The good news is the US indexes are still heading higher. The Dow Jones rose about 0.25 per cent, while the Nasdaq gained 0.45 per cent to hit record territory.
This is a critical week for investors, with both the producer price index (PPI) and consumer price index (CPI) set to land. These inflation numbers will shape expectations for interest rates. Last week, the Americans were hit with a disappointing jobs report, raising concerns that the economy might be slowing faster than expected.
Strangely enough, bad news in the US could be good news for its stock market. The weaker data has increased the chances of a half-per-cent jumbo rate cut from the Federal Reserve. If the Fed thinks it has been too slow to support the economy, we could see monetary stimulus arrive sooner than expected.
On the political front, the US Supreme Court has started hearings on whether Donald Trump’s tariffs are legal. We won’t get a ruling until November, which leaves markets hanging. If the tariffs are struck down, the government may have to refund businesses that paid them. That would create a budget headache in Washington and could spark market nerves. A sell-off is possible.
But here’s the key point: even if we see a pullback, I’d still treat it as a buying opportunity. Interest rates are heading lower, and I don’t believe the US is heading for recession. Slower growth, yes, but not recession.
The bottom line is that US stocks remain worth buying. Challenges exist, but opportunities are opening up too. That’s why I’ll keep tracking these moves each day, and why investors should stay tuned to our YouTube channel for more daily insights that can help your portfolio.
