Rising worries over the multi-decade high inflation and the possibility of a recession have heavily weighed on U.S. stocks lately. Last week, the Federal Reserve hiked its benchmark interest rate by 75 basis points to bring down the inflationary pressure, which further affected investor sentiment.
Bank of America Corp. (BAC) economists believe the U.S. economy has a 40% chance of sliding into recession next year. “Our worst fears around the Fed have been confirmed: They fell way behind the curve and are now playing a dangerous game of catch up. We look for GDP growth to slow to almost zero, inflation to settle at around 3%, and the Fed to hike rates above 4%,” the economists added.
