Federal Reserve’s Inflation Pledge Highlights Risks For S&P 500, U.S. Economy
Federal Reserve chief Jerome Powell’s vow on Wednesday to rein in inflation was, in the view of Jefferies economics team, his “whatever it takes” moment, akin to central banker Mario Draghi’s pledge to save the euro. The Fed’s plan for seven rate-hikes this year — a few more than Wall Street expected — initially led the stock market rally to falter. Yet Powell’s bullish outlook for the U.S. economy propelled the S&P 500 to session highs on Wednesday.
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In Thursday’s stock market action, the S&P 500 and other major indexes tacked on further solid gains. The S&P 500 and Dow Jones rose 1.2%, while the Nasdaq popped 1.3%. Tentative progress in Russia-Ukraine negotiations also may have helped whet investors’ risk appetite. Still, it’s worth a closer look at the Federal Reserve’s policy signals. Should they really make investors bullish about the coming weeks and months?
This was the key line in Powell’s post-meeting press…
