5 Risks That Weigh on the Markets
Find out the odds that stocks will be rattled by a recession, gas prices and other wild cards.
Prolonged recession. The market seems priced for a short and shallow recession. But the economic downturn could be deeper or much more protracted than assumed.
Odds of occurrence: 30%
Earnings tank. Wall Street's earnings estimates for 2008 and 2009 may be too optimistic. Individual stocks could fall each time analysts trim forecasts, causing big declines in market indexes.
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Odds of occurrence: 50%
Row 0 - Cell 0 | The Worst Is Over |
Row 1 - Cell 0 | The Best Ways to Invest in Bonds |
Row 2 - Cell 0 | Spotting a Stock-Market Bottom |
Row 3 - Cell 0 | How the Experts See It |
Gasoline prices pass $4 a gallon. Rising prices at the pump are an enormous tax on everyone, eating into disposable income and discretionary spending. Gas prices higher than $4 a gallon would squeeze consumption.
Odds of occurrence: 35%
Sharp overseas slowdown. Surging exports and buoyant economic growth abroad have cushioned the U.S. economy. But rising inflation overseas and the effects of a U.S. recession and ailing credit markets could lead to a global slowdown.
Odds of occurrence: 25%
The Fed reverses course. The market assumes that the Fed will continue to cut short-term interest rates. But inflationary pressures and an effort to slow the slide of the dollar may force the Fed to reverse course within six to 12 months.
Odds of occurrence: 25%
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