The stock market is in the midst of another growth scare, in our opinion. The latest batch of economic indicators has been weak. The current growth scare is reminiscent of last summer's scare. It is just as likely to pass if the next batch of economic indicators improves, as we expect. That still leaves policy uncertainty under Trump 2.0 to spook stock investors. We still expect that stock prices may continue to be choppy through mid-year before climbing to new record highs later this year on solid economic and earnings growth.
The S&P 500 is down 4.6% from its record high on February 19 and well below its 50-day moving average (chart). It might revisit its 200-day moving average on this pullback.
Much of the selloff since last Wednesday's record high has been led by momentum stocks, especially the Magnificent-7 (chart).
