US markets rise as investors weigh economic uncertainty

The Morningstar US Market Index increased by 0.6%, as investors responded positively to Federal Reserve chair Jerome Powell's comments after Wednesday's meeting. However, Morningstar's Senior US Economist Preston Caldwell notes that this optimism reflects high uncertainty, not a solid prediction. Investors are feeling conflicted. Some want to buy stocks because of recent price drops, while others want to sell due to a less favorable economic outlook. This mixed reaction highlights a key risk in volatile market conditions, as many may overlook long-term strategies. The article suggests that investors should assess how they would react if the market fell by another 20%. If the thought of such a drop changes your current plans, you may be too focused on short-term outcomes. To navigate these uncertainties, investors should evaluate new information carefully. They should consider quality and price-to-fair-value of assets as crucial factors for making long-term decisions. At the same time, they must recognize risks like high inflation. Before making any investment changes, it's wise to check if the key information has shifted enough to necessitate action. If not, the best choice might be to remain inactive. Investors should also keep an eye on upcoming economic data. Significant reports, including the Personal Consumer Expenditure (PCE) measure of inflation, are expected soon. The core PCE, which excludes energy and food prices, is predicted to rise slightly to 2.7%. Any surprises in this data could lead to market fluctuations.