The Stock Market Sounds an Alarm, and the Federal Reserve Delivers Bad News About President Trump's Tariffs
– The S&P 500 has climbed 16% this year, but there is a growing disconnect between the stock market and business fundamentals.
– The Federal Reserve recently published research that suggests President Trump’s tariffs will raise unemployment and slow economic growth.
– The S&P 500 recently traded above 23 times forward earnings, a valuation so rich it has been seen during just two other periods in the last four decades.
The S&P 500 (SNPINDEX: ^GSPC) has advanced 16% year to date despite President Trump raising the average tariff rate to its highest level since the 1940s.
So far, excitement about artificial intelligence (AI) has more than offset any misgivings about the economy.
But there is a growing disconnect between the stock market and business fundamentals.
The Federal Reserve recently published a study that suggests President Trump's tariffs will increase unemployment and slow economic growth.