Federal Reserve officials indicated at a conference in Wyoming last weekend that the stock market's recent swoon won't keep the central bank from raising interest rates this year.
Fortune senior editor Stephen Gandel isn't so sure that's a good idea
"The recent market turmoil suggests that investors don’t believe the economy is on as solid footing as Fed officials seem, or at least would like, to think," he writes.
The economy grew 3.7 percent in the second quarter, but the Atlanta Fed's forecasting model puts second-quarter growth at just 1.3 percent.
As for the stock market's volatility, the S&P 500 plunged 11 percent from Aug. 17 to Aug. 25, then rebounded 6.5 percent through Aug. 28 and has since dropped 3.8 percent.
"The stock market says a lot, and it talks every day," Gandel says. "But, to borrow a phrase, just because the market’s lips are moving doesn’t mean it’s lying. The Fed should listen up."
Many economists expect the central bank to raise rates in September or December.
As for stocks, the carnage may not be over, says Bob Janjuah, senior independent client adviser at Nomura Securities
"When we were up at [2,100 for the S&P 500 index], I thought we would see 1,700 at some point late in the third quarter, or early in the fourth quarter," he told CNBC. The index closed at 1,913.85 Tuesday. It hit a record of 2,134.72 May 20.
The 1,700 level represents a drop of 11 percent from Tuesday's close.
"We made some progress toward that target, I think there's a bit more to go," Janjuah said. The index hit a low of 1,867.01 Aug. 24.
Sluggish growth in China and much of the rest of the world will weigh on stocks, he said. "What I think the investor needs to understand is that globally there's not enough growth, there's way too much capacity. And we've hidden that gap with this thing called liquidity. Actually liquidity is debt."
Recent data have shown economic weakness in China, Japan and the eurozone.
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