Inflation is cooling down. Rates spike. Is it time for a market rally?

Inflation is finally cooling down and interest rates may soon peak. That means now may be the right time to jump back into the market, even with a possible recession on the horizon, some strategists say.

Forty years of high inflation and the most aggressive rate hikes by the Federal Reserve since the 1980s ravaged people’s wallets last year. Stocks and bonds, which normally move in opposite directions, plummeted at the same time, making the classic diversified portfolio of 60% stocks/40% bonds, or 60/40, a mess with nowhere for investors to hide. Morningstar’s US Moderate Target Allocation Index – designed as the benchmark for a 60/40 allocation portfolio – lost 15.3%, its biggest annual decline since 2008.

But 2023 is on a different trajectory, giving investors hope they can start building their retirement balance, some say.