Inflation levels in the United States are running at a level not seen since the 1980s, and the Federal Reserve officials are planning to raise interest rates aggressively. The Fed is expected to increase the target policy rate by half a percentage point in its next meeting on May 3-4. Fed Chair Jerome Powell gave the indication of a double-sized rate hike as inflation is “much higher now,” and it might be appropriate for the Fed to move a “little more quickly.”
On Thursday, the benchmark indices posted gains. The Dow rose 1.9%, and the S&P 500 gained 2.5%, while the tech-heavy Nasdaq Composite jumped 3.1%. However, the indices are still trading in the red for the month. The Dow is off 2.2%, the S&P is down 5.4%, while the Nasdaq is down 9.5% and is expected to post its worst month since March 2020. Moreover, Morgan Stanley (MS) equity strategist Mike Wilson expects the S&P to join the bear market within weeks due to the Fed’s tightening monetary policy.
