Why the Market's Rough Week Could Last Longer

To say the markets had a bad week last week would be an understatement. 

Last week, the Federal Reserve held one of its meetings. Chairman Powell announced that, while there wouldn’t be an interest rate raise at that meeting, at least one more for the year was likely. Beyond that, raises were possible in 2024. So high interest rates are basically here to stay for the foreseeable future. 

The market didn’t react kindly to that possibility. The S&P and Nasdaq saw losses that carried for the rest of the week and put them on the path for their worst week since March. 

And if that weren’t enough, government dysfunction chose to rear its ugly head at the same time. 

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Why the Market's Rough Week Could Last Longer

We’ve come to that point of the year where Congress has to decide on funding for the next fiscal year, which begins on October 1. As has been happening with increasing frequency, ideologies have been clashing and progress has been held hostage. On Thursday, lawmakers left the nation’s capital for the weekend, increasing the chances that nothing will get done and the government will be forced to shut down when funding expires. 

In the chance that a shutdown occurs, non-essential government employees will be sent home and essential employees will continue to work and will only be paid once Congress gets it together. If the shutdown drags out long enough, that could affect the broader economy. This is a worry that echoed through investor sentiment last week as the indexes continued their losing streaks. 

And let’s not forget about the ongoing United Auto Workers strike, which shows no signs of slowing down and is in fact poised to ramp up.

So all of these factors are weighing on investor sentiment and have the potential to damage GDP. The shutdown, if it happens, would also damage global confidence the rest of the world has in the country to keep the government running. 

In short, there isn’t a lot of belief that things are on the right path. 

Consumer sentiment has been sliding, even if it seems like inflation might be easing, and the factors outlined above will be doing a lot to influence that the longer they continue. 

Student loan payments are starting back up soon, directly affecting the ability many will have to spend their money in other parts of the economy. 

Oh, and right on schedule, gas prices have begun going back up. 

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Stocks spent most of the year on an upward trend. That trend is now reversing and it could be a prolonged one, if only because a lot of different factors are contributing. So even if one gets resolved, the others, and their effects, will continue to linger. 

So, in summary, the breakdown has begun and the chances of recession seem to be growing higher. This is the kind of environment where it’s harder to protect your wealth as well as make it grow. 

But it isn’t impossible. 

Nick Hodge has been building the kind of portfolio that survives and thrives in this kind of environment in the pages of Foundational Profits. For good reason, readers have trusted what he has to say for over a decade.

By buying into the right sectors at the right times, he has been able to build the kind of portfolio that has beaten the market for the past several years. His readers have been able to secure their wealth despite the whims of the market and ensure strong financial futures. 

Click here to learn how you can beat the market by investing in the same stocks as Nick.

Ryan Stancil

Ryan Stancil
Editor, Daily Profit Cycle