The stock market has been suffering since the beginning of the year due to various macroeconomic factors. The multi-decade high inflation and the Fed’s intention to fight it by raising interest rates several times this year have adversely affected the stock market. Moreover, according to many analysts, if the Fed’s battle against inflation continues, the U.S. economy could potentially tip into a recession. According to Larry Harris, the Fred V. Keenan Chair in Finance, “It’s very hard to stop inflation without a recession.”
In addition, a slower economic growth, aggravated supply chain constraints, the Ukraine-Russia war, and higher energy prices have also contributed to the current market volatility. The S&P has plunged 19% from its January 3 record. Amid this situation, investors may resort to dividend-paying stocks to protect their portfolios from short-term market volatility by ensuring a consistent income source.
