Investor Alert: Should We Be Worried About Recession?

NYSE: SPY | SPDR S&P 500 ETF Trust News, Ratings, and Charts

SPY – Even though the S&P 500 (SPY) is making new highs, there are signs the economy is slowing. In fact, it is possible we could slip into a recession if the Fed does not play its cards right. This creates an interesting cross roads for investors as recession typically results in bear market. Tune in below to Steve Reitmeister’s updated market outlook along with his plan to outperform in the weeks and months ahead. Read on for more…

The S&P 500 (SPY) continues to make new highs…and the rest of the market looks pretty anemic.

This has been the main investment story in 2024. Especially since the April pullback. This replicates much of what we saw in 2023 til the bull run that started in November that finally broadened out to smaller stocks.

This creates a difficult environment for the average investor to get ahead. Let’s discuss why this is happening along with a game plan to navigate our way to a more profitable outcome.

Market Commentary

The economy is slipping. In just 2 weeks’ time the Atlanta Fed’s GDP Now model fell from 3% expected GDP growth for Q3 down to 1.5%.

The weaker than expected ISM Services reading of 48.8 last week vs.53.8 the previous month was a big part of that reduction.

Some would point out the positives in this weakening of the economy in that it further reduces inflationary pressure paving the way to the first Fed rate cut. On the other hand, some investors may wonder if the Fed will overstay their welcome leading to a future recession.

This morning’s increase in the unemployment rate to 4.1% is an interesting data point to consider. That’s because history shows that once the unemployment rate rises 0.4% it will typically go up another 1.5% from there. And that has just taken place.

Many think of this as a good, but by no means perfect, recessionary indicator. Yet others would point out that the Fed is on purpose trying to slow demand in order to tamp down inflation. Even by their own estimates they saw the unemployment rate climbing to this level, or even a notch higher, and yet still stick a soft landing.

I am not particularly worried about a recession at this time. That’s because any further softening of the economy will beget lower inflation…the Fed will see that forming…and then lower rates to spark the economy.

Investors will play on the side of “Don’t Fight the Fed” when that happens keeping share prices aloft even if there are a few bad rounds of economic data.

Right now most signs point to the September 18th Fed meeting as when the first rate cut will take place. Over the past 12 months I have pointed out that investors didn’t appreciate the patience of the Fed and thus I was one of the few who was not surprised on no rate cuts on the books so far.

Yet now I see things lining up for September 18th like the others. Or November 7th at the latest.

Remember that the Fed likes transparency. So, the first thing they will do is provide a shift in their language that opens up the possibility of the rate cut…and then they will follow through on that action.

Powell’s recent comments on seeing notable improvement in the inflation picture (most likely  because of better than expected PCE report) was a step in that more positive direction. Yes, he said more data and patience needed, but he was opening the door wider to the notion of cuts on the way.

Since then, economic data has softened more…and we see Average Hourly Earnings (aka wage inflation) ebbing lower this morning. These are all more facts that will lead the Fed to want to cut rates in coming months.

When those rate cuts arrive, I expect the market to react like it did last November when the Fed’s “dovish tilt” first started. That would be abandoning the safe haven of the Magnificent 7 and other mega cap stocks. Those profits would then be shifted to more Risk On positions.

Like smaller stocks…higher growth stocks…more cyclical stocks that benefit from a pick up in the economy. Or to overly simplify…a reversal of what has been working so far this year.

I like our odds for the POWR Ratings to line us up for ample outperformance in that environment.

Read on below for my favorite POWR Ratings stocks at this time.

What To Do Next?

Discover my current portfolio of 11 stocks packed to the brim with the outperforming benefits found in our exclusive POWR Ratings model. (Nearly 4X better than the S&P 500 going back to 1999)

Plus 2 specialty ETFs that are benefiting from some of the hottest investment trends.

These hand selected picks are all based on my 44 years of investing experience seeing bull markets…bear markets…and everything between.

If you are curious to learn more, and want to see these lucky 13 trades, then please click the link below to get started now.

Steve Reitmeister’s Trading Plan & Top Picks >

Wishing you a world of investment success!

Steve Reitmeister…but everyone calls me Reity (pronounced “Righty”)
CEO, and Editor, Reitmeister Total Return

SPY shares were trading at $553.46 per share on Friday afternoon, up $2.00 (+0.36%). Year-to-date, SPY has gained 17.18%, versus a % rise in the benchmark S&P 500 index during the same period.

About the Author: Steve Reitmeister

Steve is better known to the StockNews audience as “Reity”. Not only is he the CEO of the firm, but he also shares his 40 years of investment experience in the Reitmeister Total Return portfolio. Learn more about Reity’s background, along with links to his most recent articles and stock picks. More...

More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
SPYGet RatingGet RatingGet Rating
.INXGet RatingGet RatingGet Rating
DIAGet RatingGet RatingGet Rating
IWMGet RatingGet RatingGet Rating
QQQGet RatingGet RatingGet Rating

Most Popular Stories on

Christmas in July for Stock Investors!

Yes, the S&P 500 (SPY) made new highs again on Tuesday. But really it is the 6X gain for the Russell 2000 small cap index Tuesday...and 12% gain this past week that is grabbing everyone’s attention. Let’s discuss why this is happening...if it will continue...and my 12 favorite stocks to rally in the weeks ahead. Read on for more...

3 Promising Tech Stocks Under $40 for Long-Term Investment

The increasing demand for technology services worldwide fuels the tech industry. Amid this backdrop, it could be wise to buy under $40 tech stocks, such as HP Inc. (HPQ), Box, Inc. (BOX), and Teradata Corp (TDC), for long-term investment. Continue reading…

3 MedTech Stocks to Add to Your Portfolio in July

The MedTech sector’s promising future is driven by technological advances, unceasing demand for medical treatments due to an aging population, and increasing global incidence of diseases. To that end, strong MedTech stocks such as Tactile Systems Technology (TCMD), Electromed (ELMD), and Embecta (EMBC) could be wise portfolio additions in July. Read more...

3 Bank Stocks Benefiting From High Interest Rates

Amid global economic uncertainties, major U.S. banks like JPMorgan (JPM), Wells Fargo & Company (WFC), and PNC Financial Services (PNC) have defied expectations with strong revenue and earnings reports for the second quarter. Considering their robust performance, investing in these stocks could offer stable returns to your portfolio. Read more…

Investor Alert: Load Up on Small Cap Stocks!

Large caps time in the sun is now over and thus no shock that the S&P 500 (SPY) pulled back from recent highs. It is time for small caps to shine which was clear in their nearly 4% gain Thursday even as the Magnificent 7 was bathed in red. Why is this happening? What comes next? And what are the best stocks to own now? The answers to all that and more are shared in the commentary below...

Read More Stories

More SPDR S&P 500 ETF Trust (SPY) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All SPY News