Strong Now but Weak Later: How to Invest in a Topsy-Turvy Economy

Last year, predictions of a recession by the middle of 2023 were commonplace. Stronger-than-expected economic data showing a red-hot U.S. labor market and resilient consumer spending in recent months have quieted that view.

Stocks rallied as recession fears diminished and traders bet on an end to Federal Reserve interest-rate increases. Riskier and more-speculative corners of the market performed the best.