In the wake of the Fed’s first interest rate hike since December 2018, Federal Reserve Governor Lael Brainard has recommended a more aggressive approach to curb inflation amid the Russia-Ukraine war and an exacerbation of logistical challenges. This, along with further Western sanctions against Russia, has dampened investor sentiment despite hopes of a steady economic recovery. This is evident in the SPDR S&P 500 Trust ETF’s (SPY) 2.5% decline over the past five days.
Mark Zandi, the chief economist at Moody’s Analytics, said, “Ultimately, the way this is going to work, the economy is going to slow, the stock market has to reflect that.” Furthermore, rising COVID-19 cases in several states might negatively affect economic recovery in the coming quarters.
