![]() The strong dollar, while helpful for U.S. German electricity prices have gone parabolic. The strategists discussed rising recession risk in Europe as energy prices continue to skyrocket. The good news for home values is that supply is still tight, keeping the average number of days homes were on the market down at 14 days in July. Based on lower buyer traffic and the lagged effect of Fed tightening, the housing slowdown is likely to continue and probably weighs on gross domestic product in the second half. Outside of the pandemic, sales reached their lowest levels since 2015. Existing home sales fell 5.9% in July, the biggest one-month drop since February 2022 and the sixth straight monthly decline. The strategists noted that the housing market continues to feel the effects of rising interest rates and inflation pressures. The S&P 500’s 17% rally accompanied by surging breadth in October 2011 was followed by a 10% correction in November 2011, suggesting that additional volatility may come even though the strategists expect stocks to be solidly higher one year from now. LPL Research is looking to the 3,900 to 3,950 range as potential support for the S&P 500 Index should further downside materialize. With just a 4% pullback so far and the inflation battle nowhere near over, additional downside is possible. The strategists think the Fed’s symposium in Jackson Hole this weekend will go a long way toward determining the near-term direction of the stock market. #Slideas go updateThey also provide an update on the housing market, discuss rising recession risks in Europe, and preview the Federal Reserve’s Jackson Hole symposium later this week. In the latest LPL Market Signals podcast, Chief Equity Strategist Jeffrey Buchbinder and Chief Global Strategist Quincy Krosby share their thoughts on how far this latest pullback might go. ![]()
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