Aside from a bit of wobbling, the US stock market has decided that Federal Reserve Chairman Jerome Powell will completely unleash the side that fights inflation in monetary policy personas.
After Powell revealed on Monday that Powell was ready to offer a 50 basis point rate hike, Treasury yields soared and money market participants’ prices rose aggressively on benchmark rates. This may be a surprise to some investors as it rises at. Since 2000, it will be held at future policy meetings if necessary to combat inflation.
“The equity rally is obviously interesting and [Nasdaq-100]
Australia’s head of research, Chris Weston, also threatened to break the decades downtrend with NDX, U.S. 10-year Treasury yields TMUBMUSD10Y, 2.381% well above 2%. Nonetheless, he said + 1.94% had solid support for less than 14,000 inches. Base Pepperstone, notes to clients.
“We need to think about why the stock wasn’t smoked,” Weston said.
Weston argued the fact that the Fed “brings out a big gun in May and preempting it with forward guidance may be welcomed by the stock market.” They consider the outlook and feel credible. The Federal Reserve is a powerful Federal Reserve, with higher interest rates better than established inflation. “
The Nasdaq-100 rose 1.5%, while the technology-intensive Nasdaq Composite COMP, + 1.96%, rose 1.6%. Technology and growth stocks are considered most sensitive to the Treasury’s rise in yields and are used to reduce the present value of future earnings and cash flow and justify high stock prices. However, Nasdaq has already fallen into the bear market earlier this month, down more than 20% from its record closing in November.
However, since the Fed launched its rate hike cycle last week, stocks have bounced sharply, federal funds rates have risen 25 basis points, indicating that significant monetary tightening has yet to take place. Stock indexes are also trading above the levels seen before Russia invaded Ukraine on February 24.
The Dow Jones Industrial Average, DJIA, + 0.74%, rose about 205 points on Tuesday, or 0.6%. The S & P 500 SPX, + 1.13%, rose 0.8% and the large cap index traded at its highest since February 11.
It is important to remember that the S & P 500 Index has fallen by nearly 15% to its February 24 lows. This means that “a lot of bad news has been priced” and that the risk / reward outlook has improved since the beginning of 2022. Tom Lee, founder of Fundstrat Global Advisors, said. With a memo.
However, the current market environment is one in which investors should not try to “become a hero” or make a “big call”, and the market is likely to remain volatile. He said.
Weston of Pepperstone said the war between Russia and Ukraine helped arouse inflation concerns as crude oil and other commodity prices soared in volatile trading. It translates into a period of rough cutting of stocks, but the fund is “well hedged, bystanders have a lot of cash, and rotation is realistic,” he said. In a utility-like sector.