What’s going on?

• The US stock market hit another record high, but there are signs that this hype is fading soon.

What does this mean?

• The S&P 500 has delivered a positive September-return in less than half the time since World War 2 (reported by research firm CFRA). For this year’s September,
  • The key US stock market index has already fallen by an average of 0.56%.
  • There’s added pressure from the Delta variant, whose spread could accelerate with a return to school. That’s on top of the slowdowns some retailers and restaurants are expecting.
  • The Fed is expected to include details of when it’ll reduce support for the US economy at its update. And even if it doesn’t start slowing down on its bond-buying program, stock prices are expected to fall long before the Fed takes any action.

Why should I care?

The bigger picture: What’s expected seems to be coming

• Economists have cut their average 3Q US economic growth forecasts to 6.2% from the 6.9% a few months ago.
• Finance firms have a history of hiring surges right before a big crash, and Fidelity (investment management giant) is planning to hire 9,000 people to handle the high demand for stocks from retail investors.

Zooming out: Demand might already have disappeared

CMC Markets (retail trading platform) announced that it had been seeing lower-than-expected trading activity (representing the loss of investor interest as they ventured out of their homes), which makes its expected annual profit to be 25% lower than investors’ expectation. Its shares fell 28% afterwards.

Content source: Finimize (2021) Out Of Luck. Available at: https://www.finimize.com/wp/news/out-of-luck/ [Accessed on Sep 3, 2021]