STOCK investors are expected to tread carefully next week, as speculation about the timing of a US Federal Reserve interest rate hike adds to concerns about valuations.
Since hitting record levels two weeks ago, the US stock market has struggled for direction, and investors said the next several sessions might prove no better.
A run of better-than-expected economic figures failed to boost sentiment and instead renewed focus on whether the Fed will begin to raise short-term lending rates before long.
At the moment, individual investors lack any particularly strong inclination to buy or sell.
Investors polled by the American Association of Individual Investors have increasingly said they are “neutral” on the market, suggesting uncertainty about where stocks are going.
“There’s complacency, more complacency than I’m comfortable with. It makes me nervous,” said Leo Grohowski, chief investment officer at BNY Mellon Wealth Management in New York.
“Market participants don’t seem prepared for an uptick in volatility, which is consistent with high levels of margin debt.”
An increase in market volatility could quickly worsen market sentiment, which could become amplified by high margin levels, analysts warned. The market has been in a trading range for several weeks, and some worry that a break lower could be violent.
Meanwhile, companies reporting this week include Sears Group, Lululemon and Krispy Kreme.