Jerome Powell, chairman of the Federal Reserve Board (FRB), said at a press conference on the 4th that it triggered a sharp rise in stock prices for the first time in regarding 10 years on the day of the Federal Open Market Committee’s (FOMC) policy announcement.
The trigger was just a few phrases. The stock market weakened shortly following the FOMC announced a 0.5-point rate hike to curb high inflation for the first time in 40 years, but Powell said, “The Commission is not actively considering a further significant rate hike.” In response to the statement, the S & P 500 Index surged and ended 3% higher than the previous day.
For the bulls in stocks, even if it wasn’t a clear dovish answer, it might at least be interpreted as setting a certain limit on the hawkish stance of the authorities needed to respond to rising prices. Bloomberg’s aggregated data show that buying has become dominant in the market, as these signals have been few recently, and the S & P 500 has been the best-performing reaction immediately following the FOMC meeting since 2011. If we focus on the cases where interest rates have been raised, it will be the largest increase since at least 1990.
“Eliminating the remaining tail risk is the best feast bone the market can get right now,” said Max Gokman, Chief Investment Officer at Alpha TrAI. For this reason, the S & P 500 is like a delighted puppy. I bounced. “
Powell’s statement that authorities consider the federal funds (FF) rate level to be between 2% and 3%, which is economic-neutral, may have boosted market sentiment. This may have fueled some bulls by the chair’s failure to mention higher levels, although few market participants expect the rate hike cycle to stop there, at least within the expected rate hikes later this year. There is also sex.
“The authorities aren’t trying to’crash’the market at today’s FOMC meeting,” said Aaron Rosin, head of equity derivatives for institutional investors at Oppenheimer. It’s not more or less than that. That’s a great relief. “
Original title:
Stock Bulls Get Reprieve as Powell Signals a Limit to Austerity(excerpt)
