What a year this has been for the markets! Fueled by a torrent of monetary and fiscal stimulus, economic and earnings growth, and (until recently) a mostly receding pandemic, the
stock index has rallied 20%, notching seven straight months of gains and more than 50 highs along the way. And that’s on top of last year’s 68% rebound from the market’s March 2020 lows.
Tailwinds remain in place, but headwinds now loom that could slow stocks’ advance. Stimulus spending has peaked, and economic and corporate-earnings growth are likely to decelerate through the end of the year. What’s more, the Federal Reserve has all but promised to start tapering its bond buying in coming months, and the Biden administration has proposed hiking corporate and personal tax rates. None of this is apt to sit well with holders of increasingly pricey shares.
In other words, brace for a volatile…