Investors are doubling down on stocks, shaking off fears of an economic slowdown in the U.S. which caused a sell-off earlier this month. Global stock markets fell sharply in early August after a rise in unemployment sparked fears that U.S. economic growth could slow more than expected. It led a number of investment banks to hike their expectations of a recession, with JPMorgan raising the probability to 35% by year-end.
"Even the perma-bears would have struggled to find much in the slew of data released over the past week that would justify recent recession fears," Shearing said in a note to clients on August 19. Over the weekend, Goldman Sachs cut its probability forecast for a U.S. recession to 20% shortly after raising it to 25%. Striking a bullish tone, Capital Economics expects the S & P 500 to reach 6,000 by year-end and 7,000 next year, 8% and 26% above current levels, respectively.
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