US stocks shot to record highs Monday as investors bet that an interest rate trim this week and tax cuts will provide a fresh economic boost.
The so-called “run it hot” trade is booming despite warning signs in the US labor market and gloomy narratives of an economic slowdown. Some experts are skeptical: The Federal Reserve’s widely expected decision to cut rates on Wednesday “convinces people that the Fed is scared of a recession — so they become scared of a recession,” one analyst said.
The stock market is also reliant on “an increasingly narrow slice of the economy” as fewer big-name companies go public, masking deeper structural risks, a business law professor argued in The New York Times.
Chart showing three-month stock index performance.