Powell’s remark highlights a growing concern—valuations are stretched, especially with the S&P 500 trading well above historical averages. Elevated multiples leave less margin for error, making the market more sensitive to macro shocks or earnings disappointments. A correction, even if brief, would not be surprising as investors reassess risk premiums.
That said, seasonality still matters. Historically, U.S. equities often climb into year-end, supported by window-dressing, holiday spending, and year-end liquidity flows. Unless economic data sharply weakens or policy guidance turns more hawkish, the recent pullback may remain shallow rather than a full reversal.
In short: Powell’s warning could spark choppiness, but without a major catalyst, it may play out as consolidation rather than a deep correction.
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- village5576·09-26Insightful analysis, truly thought-provoking! [Heart]LikeReport