The stock market has entered a phase where the old playbook — “slowing growth = rate cuts soon = stocks up” — no longer works. The economy is losing momentum, but inflation remains sticky. That creates a stagflationary backdrop: weak growth, elevated prices, and higher-for-longer rates.
Jerome Powell’s signal is critical in this setup. The Fed is in no rush to ease because the risk of a fresh inflation wave is still on the table. For equities, that means a double headwind: high rates compress valuations, while a slowing economy drags down earnings expectations.
As a result, the market is becoming far more selective. Overvalued growth names are the most exposed, while defensives and commodity-linked sectors look more resilient. This is no longer a broad bull market environment — it is a regime of elevated volatility, tighter conditions, and harsh stock selection.... Show More
Not investment advice. The author may have financial interests in the mentioned instruments.
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Mon May 11 2026 06:37:02 GMT+0000 (Coordinated Universal Time)
