Wall Street Braces for Uncertain Future Amidst Market Volatility

A likely recession, poor market breadth, and rising interest rates threaten stocks, warns Phillip Wool, a portfolio manager at $17 billion asset management firm Rayliant. The AI hype is taking investors' focus off of fundamentals, and is fueling a rally driven by only a small percentage of stocks. Weak market breadth has been a hot topic on Wall Street in recent weeks, as it can signal that a rally is unsustainable. Rayliant's models show a "very high likelihood" of a downturn. Wool expects the S&P 500 to fall 15% in a "simple downside scenario," or back to October lows (closer to a 19% decline) in a harder landing scenario.