The stock market had a difficult first half of the year due to worries over record-high inflation. The combination of the Fed’s hawkish tilt, lingering supply chain issues, and continuing geopolitical tensions have proved to be substantial obstacles for the market and economy. The result has been a slowing economy, which contracted for two consecutive quarters, signaling we have slipped into a recession.
While the benchmark indexes have significantly recovered since June lows, many analysts believe the market has further fall if the Federal Reserve continues its aggressive interest rate hikes. The policymakers have indicated that they will keep raising rates until inflation comes down to the central bank’s target level. From a market perspective, going from 8% inflation to 2% could prove to be a painful process.
