The Yale barometer shows that fears of a stock market crash among investors are the highest since the start of the pandemic

The Yale barometer shows that fears of a stock market crash among investors are the highest since the start of the pandemic
2008 market crash

Some Wall Street investors remained worried about the prospect of a recession and a stock sell-off.Reuters/Lucas Jackson

  • A Yale University poll showed that fears of a 1987-style stock market crash were the highest since the pandemic.

  • And 44% of institutional investors believe that a similar crash is at least 10% likely within the next six months.

  • This is just below levels reported in March 2020, when 51% of institutional investors feared this outcome.

Investor fears of a stock market crash are the highest since the pandemic, according to a barometer of sentiment maintained by researchers at Yale University.

The American Sentiment Index, an indicator that measures investors’ belief that the stock market has a greater than 10% chance of experiencing a 1987-style stock crash, is the highest since the pandemic’s early months, when the S&P 500 crashed about 30% over a few weeks.

US Confidence Index

Fears of a 1987-style stock market crash are the highest since 2020, Yale University’s US Crash Sentiment Index showed.Yale School of Management

About 34% of individual investors believe that the probability of a Black Monday-style crash is more than 10% in the next six months. Meanwhile, 44% of institutional investors believe a crash of this magnitude is imminent, according to the Yale Institute of Management. Latest poll read. Compared to March 2020, when 26% of individual investors and 51% of institutional investors believed in such an outcome.

A steady stream of bearish investors on Wall Street have been worried about… Probabilities of recession and sharp selling in stocksAlthough inflation has slowed, the US economy remains resilient. This is because the Fed could keep interest rates higher for longer than markets expect, which increases the risk of central bankers pushing the economy into deflation.

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the Federal funds rate Interest rates were raised to a target range of 5.25%-5.5% in July, the highest since 2001. Markets expect interest rates to remain in this range in December at 53%, and the probability of a rate hike of 39% in 25 days other. basis points by the end of the year CME FedWatch tool.

Rising interest rates could diminish the strength of the economy, especially when considering the delayed impact of the Fed’s rate hikes, which began in March 2022. The job market has already begun to slow down Its strong growth over the past year, and And now Americans are starting to deplete their spare savingswhich has been a major roadblock to the economy since the pandemic.

The Federal Reserve Bank of New York has projected that there is a 66% chance of the economy tipping into recession by July 2024. Stocks may decline by at least 15%even in the event of a mild recession, according to JPMorgan strategists.

Read the original article at Business interested

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