An August stocks slump is ‘absolutely normal' — but strategists urge caution on buying the dip

Strategists are urging caution amid a global stock market sell-off, saying it may be premature to buy the dip as shares seem susceptible to further declines. U.S. stocks had a rough start in August due to concerns over a worsening economic outlook. Initial jobless claims increased significantly, and the ISM manufacturing index signaled economic contraction. Weak data has led to fears that the Federal Reserve may be slow in cutting interest rates to avoid a recession. European and Asian markets also saw declines. Despite the market sentiment, corrections during this period are considered normal. Some investors believe that the seasonal rise in equity market volatility should have been expected given the historical patterns. Policymakers at the U.S. central bank are considering a rate cut in September. An expert advises against buying the dip at this point, stating that global shares remain vulnerable to further falls. Market attention now turns to the nonfarm payrolls report for insights into the pace and scale of future Fed cuts.