We saw the U.S. stock market (S&P 500 index) rally strongly in the month of July only to give back around 4.2% in August. The last week of August and as of this writing the market is continuing to price in higher interest rates and a slower global growth rate. Therefore, stock and bond markets have resumed their downtrend which started around the first of this year. As of yesterday’s market, close Fed Funds rate expectations going forward is:
September: 0.75% hike to 3.00 -3.25%
November: 0.5% hike to 3.50 – 3.75%
December: 0.25% hike to 3.75 – 4.00%
May 2023: 0.25% hike to 4.00 – 4.25%
No more hikes
Rate cuts start in the back half of 2023 and continue in 2024
The above is always subject to change at any moment and more than likely it will be different than described above. Again, the above is what traders expect as of yesterday 8/31/2022.
Technology and retail stocks year to date have been under tremendous pressure and most of the companies are trading down 40% -80% since January 2022. We remain certain that the markets will eventually discount all the negative, rate hikes and trade higher while economic conditions appear bleak. Just like past bear markets, this one will pass, and economic growth will resume resulting in higher market prices.
The views expressed are not necessarily the opinion of Cadaret Grant, and should not be construed directly or indirectly, as an offer to buy or sell any securities mentioned herein. Investing is subject to risks including loss of principal invested. Past performance is not a guarantee of future results. No strategy can assure a profit nor protect against loss. Please note that individual situations can vary. Therefore, the information should be relied upon only when coordinated with individual professional advice.