S&P 500 Correction: Will Jerome Powell Come to the Rescue This Time?

The combination of headwinds preying on the US stock market is screaming ‘correction’ so loudly that, interestingly, the only factor weighing against such a move from occurring might be the very fact that markets frequently defy expectations when a situation seems overly apparent.

With the never-ending property crisis in China reaching new worrisome developments, the highest 10-year treasury rate in 16 years, a still hawkish Fed going into the Jackson Hole Symposium, August seasonality, and a possible double-top formation on the S&P 500 technical chart, risks are at one of the highest levels since the beginning of 2023.

As pointed out by Tavi Costa, the double-top pattern is more apparent when adding FANG stocks to the NYSE Composite.

Source: Tavi Costa

In fact, the S&P 500 has lost ground in 11 out of the 14 market days of August, down roughly 4.8% for the month, indicating that the highly-expected correction might be already underway.

Source: Investing.com

As a result, a mounting number of analysts are growing worried about the health of this year’s stock market rally:

“Markets are being hit by the perfect storm,” Barclays Head of European Equity Strategy Emmanuel Cau said last week.

Likewise, David Roche, president of Independent Strategy, told NBC last week:

“I think the downside in markets is very big, still, at these levels, and they’re not priced for it,”

But despite the short-term headwinds, big picture-wise, the economy shows impressive resilience. Morgan Stanley economist Ellen Zentner wrote in a note to investors last week:

“We have maintained our out-of-consensus call for a soft landing since early last year. The data have continued to move in our direction, our view has only strengthened, and a