A note from Morgan Stanley highlight the 3 risks to the stock market rally:
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Cooling labour market – Recent jobs data showed weaker-than-expected hiring, downward revisions to prior months, and a decline in job openings, suggesting the employment picture may be softening and potentially signalling slower economic growth.
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Skewed Q2 earnings – While headline earnings appear strong, gains are concentrated in a few sectors (tech, communication services, financials) and a handful of mega-cap stocks, leaving most companies with flat or modest profit growth.
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Potential stagflationary pause – Rising tariffs and lingering inflation risks could erode economic momentum later in the year, with current market strength possibly masking delayed economic pain.
So far, though, all the risks to the US equity rally have not counted for much. Another record high day again on Tuesday after inflation data <checks notes> showed above target and the core accelerating higher.
This article was written by Eamonn Sheridan at investinglive.com.
