U.S. consumer confidence fell on worries that tariffs will raise the price of goods. The S&P 500 (SPY) and Nasdaq (QQQ) entered correction territory, losing around 10% from its recent high.
How likely is a recession? This is defined as two consecutive quarters of negative GDP growth.
Stock markets are pricing in the risks of both tariffs and DOGE. DOGE is an advisory group seeking to cut government costs. Job losses will hurt parts of the economy. However, increases in social services and military spending over the last four years would still need government workers. They need to oversee their program spending.
Investors bought military stocks since the bottom in mid-February. Lockheed Martin (LMT) and L3Harris (LHX) are now in an uptrend.
Bank stocks like Bank of America (BAC) traded as if a recession would start this quarter. BAC stock formed a bearish double-top pattern of $48. After trading below $40, it closed at $41.44. An uptrend may form from here. Canadian banks are already in a solid uptrend. TD Bank (TD) is in an uptrend, Bank of Montreal is trading in a range, while CIBC (CM) and Royal Bank (RY) are in a downtrend.
Watch the direction that bank stocks take. If their uptrend holds, markets are betting an economic recession is unlikely.
