As expected by the market, the Fed has hiked the benchmark interest rate by 50 bps in an attempt to curb runaway inflation. While the market braces itself for the future, many analysts are concerned that the economy may slip into recession because of the central bank’s tightening monetary policy and the consequences of an intensifying geopolitical crisis. However, according to Fed Chairman Jerome Powell, “The American economy is very strong and well-positioned to handle tighter monetary policy.”
Recession or not, mega-cap stocks deliver steady returns thanks to their broader market reach, ample liquidity, and pricing power. So, we think it could be safer to bet on quality mega-cap stocks to provide some cushion to one’s portfolio because the stock market is expected to remain highly volaille in the near term.
