The Sky is Falling and Stocks are Raining

Federal Reserve Chairman Jerome Powell appeared before Congress on Tuesday and made comments signaling even bigger interest rate hikes than previously expected. Inflation climbed to 6.4% in January and over 500,000 jobs were added throughout the United States. This resulted in Chairman Powell stating that rates will probably rise to greater levels and be held there for an extended period of time. Goodbye soft landing.

The stock market reacted almost immediately following Chairman Powell’s testimony, with the S&P 500 falling 1.5%, the Dow Jones Industrial Average 1.7%, and the Nasdaq Composite falling 1.2%. Markets had already “priced” in a .25% hike from the Federal Reserve with cautious optimism that later this year rates would level off or begin to drop. Now the market has “priced” in a .5% hike.

The Federal Reserve is set to meet again in the next two weeks and will announce its policy on March 22. Hopefully, there is some good news hidden in the announcement otherwise raining stocks may turn to hail.

For more information, please reach out to the Professionals at The Center for Financial, Legal, & Tax Planning Inc., at 618-997-3436.