Markets Ring the Alarm on Sticky Inflation and Looming Rate Hikes
TL;DR Summary
Stocks have risen through eight months of 2026, but sticky inflation (PCE around 3.7% in July) and the odds of further Fed rate hikes threaten the rally. With the S&P 500 CAPE ratio at about 40.6, the highest since 2000, history suggests sizable declines could follow—potentially around 30% for the S&P and 51% for the Nasdaq by 2029—so the piece urges focusing on high-quality, fairly valued stocks with durable moats rather than chasing momentum.
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