It may be the Federal Open Market Committee (FOMC) meeting just a few times ahead that will bring calm to the turbulent US stock market. Invesco strategists such as Kristina Hooper have shown this scenario.
The strategists said the US monetary authorities might shift their policy in September to slightly weaken their aggressive monetary tightening stance.
“It can be a real driving force for US equities,” Hooper, chief global market strategist at Invesco, said in an interview with Bloomberg Radio yesterday. If inflation expectations are stable enough, US monetary officials continued that they might weaken their hawkish stance in the fourth quarter (October-December).
As concerns regarding a slowdown in growth spread throughout the market, expectations over the upper limit of borrowing costs have receded, leading to a move to factor in interest rate cuts next year.
One view is that stocks that have entered the bear market earlier this year will need a less warlike central bank. That said, persistent price pressures and squeaky corporate earnings remain a major issue for equities.
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news-rsf-original-reference paywall">Fed Pivot in September Floated as Possible Stock Market Savior(excerpt)