Lede

Investors' previous welcoming signs of a slowing economy may no longer mean good news for the stock market due to fears of a potential recession.

Summary

• Investors are now worried about a potential recession and the effects it may have on the stock market.
• Previously, investors welcomed signs of a slowing economy, as they believed it meant the Federal Reserve would soon stop raising interest rates and avoid a recession as inflation cooled.
• The focus of the market has shifted from inflation to recession, and evidence shows that inflation is slowing down, with the labor market beginning to soften.
• Stock prices have gained so far this year, but there are doubts about the sustainability of the rally.
• Market participants are uncertain whether the Fed is done raising rates, and it's unclear whether the economy is headed for a recession, which is leading to hesitation and skepticism in the market.
• First-quarter corporate earnings reporting season kicks off later this week, and it's expected to be a make-or-break period for the market.
• Operating profits are expected to have shrunk by 6.8% last quarter, and if the forecast comes true, it would be the worst quarterly contraction for earnings since the third quarter of 2020.
• Investors will be paying particular attention to banks, which will be among the first batches to report their earnings, as some, including JPMorgan Chase & Co. chief executive Jamie Dimon, warned that the banking crisis is not over.
• Despite some optimistic predictions, there are still concerns about whether or not the bear market for the S&P 500 is over, and whether new lows may be ahead.