After a period of record highs, U.S. stock market investors have experienced significant volatility since August, leaving them shaken. With future uncertainties such as potential Federal Reserve rate cuts, the presidential election, political turmoil in Europe, and the concentration of investments in major tech stocks, there is growing concern that the "good times" may be over.

The once relentless stock market rally took a sharp downturn in early August as recession fears spread.

While the S&P 500 index rebounded, it did not fully recover its losses. Recently, with employment data signaling a cooling labor market, the stock market returned to a downward trend. Last week, the S&P 500 fell by 4.25%, and the Nasdaq 100 saw its largest drop since November 2022.

Concerns about growth in China and Germany have also weighed on the market. Anxiety over Germany's economy intensified after reports that Volkswagen might close plants in the country, coupled with growing political instability ahead of next year's elections.

In China, the world's second-largest economy, weak demand is a major issue. JP Morgan Chase stated that China is struggling with a sluggish recovery post-COVID-19, with consumer spending shrinking due to a prolonged real estate downturn. The bank has retracted its recommendation to buy Chinese stocks, citing risks from the U.S. election and potential new tariffs. Bloomberg also warned that despite an expected rate cut, risks that could undermine investor sentiment—such as the U.S. presidential election—remain. Arun Sai, chief strategist at Pictet Asset Management, said, "Not long ago, the market was only going up, and investors were buying the same stocks, but that's no longer the case. The market won’t keep rising endlessly."

Despite August’s turbulence, the S&P 500 is up 13% for the year, and the MSCI World Index has risen by 10%. However, many experts believe that further gains will be difficult. According to Bloomberg, 20 stock market strategists predicted an average S&P 500 target by the end of 2024 that is only 1% higher than current levels.

The stock market has faced challenges before and has often rebounded quickly, so this current crisis could pass as well. Even in the face of geopolitical tensions such as the collapse of banks in the U.S. and Switzerland, and the outbreak of war in the Middle East, the market's reaction has been temporary.

In 2022 alone, skyrocketing inflation and the Federal Reserve's rate hikes triggered a global sell-off amounting to $18 trillion. However, as inflation eased and the possibility of rate cuts grew, optimism returned to the market. As a result, the S&P 500 began recovering in 2023, setting 38 record highs so far this year.

Jens Forrenbach, head of public markets at Man Group, said, "U.S. stock prices are somewhat inflated, and the possibility of a hard landing hasn't been priced in. If negative indicators emerge, the market could react sharply."

As market turbulence increased, companies in the U.S. and emerging markets rushed to issue dollar-denominated bonds to secure liquidity. According to the Financial Times (FT), 29 investment-grade U.S. bonds were issued on September 3 alone, a record for a single day. The following day, issuance continued at a high pace, with a total of $73 billion in bonds issued over two days, marking the largest volume in 20 years. [Yonhap]