As reported by Reuters, Wall Street hit the panic button last week and survived. But the shocks have left investors stranded.
Following its worst week in almost three years, the S&P 500 has fallen into correction territory and year-end forecasts are already being lowered. Safe havens like gold and the Swiss franc rallied.
Economic growth has slowed and budget-cutting legislation recently passed in the U.S. Congress could further dampen economic activity.
That leaves the path uncertain. So what are investors to expect in the weeks ahead?
“In a word, volatility,” said Citigroup strategist Jamie Searle.
Another source of worry was thrown into the mix late on Friday when Standard & Poor’s stripped the United States of its top-notch triple-A credit rating. In its report on the action, S&P sounded pessimistic that U.S. lawmakers could reach the consensus needed to rein in deficits that were responsible for this ratings cut.
“The long-term implications are daunting,” said Jack Ablin, chief investment officer of Harris Private Bank in Chicago. “Short-term, Treasuries remain a premier safe-haven refuge.”