The S&P 500 Index just experienced its worst first six months of the year since 1970, falling 20%. The twin threats of inflation and higher interest rates have overwhelmed the market despite a low unemployment rate, cash-rich consumer balance sheets, and a significant return of demand for consumer services. While sell side analysts have not yet reduced the nearly 10% earnings growth estimates expected this year, market declines clearly indicate investors expect otherwise. Investors started the year anticipating a recession was a modest possibility and with June’s decline of 8% in the S&P 500 Index, it’s obvious they have moved to a recession being probable sometime in the next year.

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