After experiencing two months of "immunity" to tariff threats and the Federal Reserve's tightening policies, strong economic data from the United States has been a reassuring factor for investors continuously pouring into the market. However, after the latest weak economic data was released, U.S. stocks seem to be "unable to hold on." On the 21st, the U.S. reported poor consumer confidence, real estate, and service sector data, causing investors to feel anxious about the economic outlook and inflation stickiness. The S&P 500 Index recorded its largest single-day drop of the year, falling by 1.7%. Meanwhile, safe-haven assets were in demand, with the yield on 10-year U.S. Treasury bonds dropping nearly 8 basis points to 4.43%. Previously, hedge fund Point72, Morgan Stanley, and Goldman Sachs all issued warnings that a correction in U.S. stocks might occur soon. Goldman Sachs believes that the U.S. stock market is becoming increasingly crowded, and the motivation for buying on dips is weakening. Michael O'Rourke, Chief Market Strategist at JonesTrading, stated: "Previously, the market bulls were supported by speculation and hope that Trump's policies would promote deflationary growth. But the data we are receiving now does not support that argument." Economic Data Is No Longer a Reassurance Ongoing economic data has been one of the pillars of the "America First" investment logic, but it may also lay the groundwork for a rapid correction. For bullish investors, the previously released strong economic data has been their justification for speculation. However, the report released on Friday indicated that, according to the final data from the University of Michigan for February, consumers expect prices to rise at an annual rate of 3.5% over the next five to ten years, the highest level since 1995. Meanwhile, consumer confidence remains low. In addition, regarding inflation expectations, the final value of the 1-year inflation expectation for February is 4.3%, the highest since November 2023, with an expectation of 4.3% and an initial value of 4.3%. **The final value of the 5-year inflation expectation for February is 3.5%, the highest since April 1995, and also the largest month-on-month increase since May 2021, with an expectation of 3.3% and an initial value of 3.3% ** US February Services PMI unexpectedly fell into contraction, hitting a new low since January 2023; meanwhile, the previously weak manufacturing sector continued to improve and expanded again, performing better than expected; dragged down by the services sector, the February Markit Composite PMI preliminary value hit the lowest since September 2023. After the data was released, expectations for interest rate cuts increased, with the US interest rate futures market currently anticipating a reduction of 44 basis points this year, up from 38 basis points the previous day. The market generally believes that the Federal Reserve may restart the rate-cutting process at the policy meetings in September or October. Marija Veitmane, Senior Multi-Asset Strategist at State Street Global Markets, pointed out: "Institutional investors took a very risk-on position at the beginning of this year. As long as the US economy continues to move forward, bullish investment strategies can persist." These data led to a sharp shift in market sentiment. The VIX, a measure of market volatility, rose to one of its highest levels this year, although it remains below 20. The bond market also showed risk-averse sentiment, rising for the third consecutive day. Capital Flows: Concerns After Record Inflows Since the beginning of this year, the low volatility of data and asset classes has been an incentive for investors to continue pouring funds into the market. Data shows that US cross-asset exchange-traded funds (ETFs) have absorbed $155 billion so far this year, setting a historical high for the same period. According to Bank of America citing EPFR Global data, as of last Wednesday, the weekly inflow of junk bonds reached the highest level in three months. EPFR data also shows that the inflow of funds into the US stock market in January hit a historical high since the beginning of the year. In light of the current market environment, investors need to reassess their strategies. Ayako Yoshioka, Senior Portfolio Manager at Wealth Enhancement Group, believes that as long as the job market remains relatively healthy, it is unwise to abandon risk assets. She suggests that investors should maintain a diversified portfolio and continue investing in various risk assets to hedge against market volatility. However, Bank of America interest rate strategist Bruno Braizinha cautioned: "We are entering a somewhat complacent area, and it makes sense to hedge against some tail risks. Given the high uncertainty in economic policy and trade, you should hedge against these risks."