Yearend Jitters

The stock market has the jitters as investors worry that the economy may be too strong and too weak at the same time. Yesterday the S&P 500 fell because November's non-manufacturing purchasing managers index was stronger than expected (chart). Investors concluded that the economy may be too strong requiring the Fed to raise interest rates still higher, increasing the risk of a recession.

Today, stock prices tumbled again. This time, the concern is that a recession is on the way no matter what. Indeed, during an interview with CNBC today, JPMorgan Chase's CEO Jamie Dimon declared that inflation and its impact on the consumer “may very well derail the economy and cause a mild or hard recession that people worry about.” Separately, Morgan Stanley announced that the company will cut 2% of its workforce.