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What’s the next catalyst for stocks? There may not be one—and thus there may be no good reason to buy at this point, writes The Wall Street Journal columnist Justin Lahart.
The tax cut is all but priced into the market, and U.S. stocks haven’t been cheap for a while now. Foreign profits have been a market driver, but they’ll probably ebb next year as recoveries stabilize.
Inflation pressures are building, which means the Fed will likely raise rates at least three more times next year. What’s more, central-bank buying won’t provide the boost that it has in the past. The Fed also will continue shrinking its balance sheet and the ECB expects to wind down its asset-buying program by the end of 2018.
“There is always the possibility that some new reason for stocks going higher, such as surprisingly strong growth, will emerge in coming months. Until then, investors are right to fret about the bull market’s staying power,” writes the Journal.