SUMMER TRADERS DON’T WANT TO GET BURNED

Past scares — such as Brexit, Lehman Brothers — have been known to rock Wall Street. What will the dog days bring this time?

Summers have been anything but lazy on Wall Street.

Last June, the “Brexit” shock dominated stock markets. The year before, Greece’s debt crisis made waves. And prior to that, investors had spent the summer months stretching back to 2008 sweating over fears of the Federal Reserve scaling back its stimulus program. Or a downgrade of America’s credit rating. Or early signs investment banking giant Lehman Brothers was on the brink of collapse.

But big moves aren’t always lower. The bull market for stocks posted sizable gains in summers of 2009, 2010, 2012 and 2014, and it charges on.

So what’s the call this summer? Is a swoon in the forecast? Or will investors dance to the beat of rising stock prices and celebrate their own version of “Summer of Love,” 50 years after the hippie- led social phenomenon shook the country’s buttoned- down culture?

Just like “the mercury in the thermometer this summer, the stock market will have inevitable ups and downs,” says Mark Hamrick, senior economic analyst at Bankrate. com.

The most likely outcome is a continuation of the calm that has been in place for months, what Nick Sargen, senior in- vestment advisor at Fort Washington Investment Advisors, calls “a summer lull.”

Past flare- ups in the period from Memorial Day to Labor Day — the 7.5% swoon in 2008 when investors first sensed trouble at Lehman, months before its bankruptcy; the 10% drop in 2011 when U. S. budget woes were laid bare; the 12% drop in 2015 when Greece was running out of money and a bailout was uncertain — all had one thing in common: They posed threats to the U. S. economy and its financial stability.

Sargen doesn’t see that the type of threat this summer. Investors, however, are monitoring possible sources of trouble, such as North Korea’s nuclear missile threat and political turmoil en- gulfing President Trump and his administration, he says.

Investors have looked past these concerns because economic conditions are improving around the world. That optimism is expected to bolster stocks. There is “little reason to be concerned about a recession here or abroad,” Sargen says, adding second- quarter U. S. growth is expected to bounce back after a weak start to the year, and corporate profits should continue to be strong.

Sargen doesn’t see Wall Street getting spooked by a likely interest rate hike from the Fed, either. Nor does he expect German Chancellor Angela Merkel’s fall re- election bid to get derailed in the summer months, a development that would shake markets.

Still, the market isn’t void of risk. It could turn turbulent, Sargen says, if there’s “no sign of progress” in getting Trump’s tax cut plan passed or if the president’s political troubles “bring back gridlock” in Washington and no major legislation aimed at bolstering the economy gets passed.

Peter Cardillo, chief market economist at First Standard Financial, says a stalled Trump agenda could cause a market dive, one big enough to cause an official correction, or a drop of more than 10%. There’s also risk of unexpected overseas events putting a scare into investors, he warns.

“On the international side, a military confrontation with North Korea could make the possibility of a market swoon greater,” Cardillo says.

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