There seems to be an interesting dilemma between the Market and the Fed since the beginning of 2022 when the vicious hiking cycle was kicked off by Powell and friends.
The market continues to get its hopes up every time there’s a slim chance of a pivot only for it to be crushed at the next FOMC meeting or by hawkish Fed speak.
The recent drawdown in stocks has been caused by a combination of economic data showing sticky inflation and Fed hawkishness showing a willingness of board members to continue hiking at an accelerated pace.
The S&P 500 started off the year hot with an almost 9% gain only to cut that gain in half come today. Markets are now pricing a terminal Fed Funds Rate around 5.3%, which is above the current rate of 4.50%-4.75%.
Selling will most likely persist until the market gets a clearer picture of where rates are headed.
Money Fad 