Abreast of the market: The landing: Between a soft and hard place: In stocks, jitters over possibility of a recession
AuthorAffiliation Staff Reporters of The Wall Street Journal</br></br>Friday's report that April unemployment jumped to 5.8% from 5.5% was viewed by some investors as a sign that the Fed may have raised interest rates so high that the economy could stall later this year. That would put heavy pressure on corporate earnings, the driver of the bull market rally that has seen stock prices post a series of new highs recently.</br></br>Most economists, however, say they believe it's premature for investors to start worrying that a recession is near and say that investors may be overreacting to recent economic indicators.</br></br>"There's no question that in the last couple of days more and more people have begun considering that maybe the soft-landing is going to be a hard landing," says Ed Nicoski, chief market strategist at Piper Jaffray. "Two days of market action doesn't offer enough evidence for a meaningful conclusion, but the thinking has certainly shifted."</br></br>After a relentless six-month rally in which major averages gained nearly 20%, stock prices have stumbled in the past two sessions. The declines have been relatively modest, but they come in stark contrast to a powerful bond market rally during the same two sessions. Long-term interest rates have now dropped to 7.025% as bond bulls cheer the steep slowdown reflected in recent economic data.