When the US stock market plummeted in 2018, Federal Reserve Chairman Powell appeared to support market sentiment. Two years later, when stock prices entered the bear market at the fastest rate ever, the chairman greatly supported the financial system.
Investors are wondering what it takes for the Fed chair to regain its informal role as a market savior this week, when the Nasdaq 100 index has fallen sharply since March 2008 on a weekly basis.However, the economy is booming, the consumer price index (CPI) growth rate is at the highest level in 40 years, and inflation control is the Fed’s.ObligationThat’s clearly a high hurdle for Powell to embark on support, as US President Joe Biden said.
With the current US stock market doubling in three years, the Fed has recentlyHawksThe idea of withdrawing the stance and exercising the “FRB put” to support the market must be reconsidered. The Federal Open Market Committee (FOMC) is scheduled for next week. Authorities are expected to suggest that the Nasdaq 100 Index is ready to raise rates shortly after it enters the adjustment phase.
Credit Suisse Group interest rate strategist Jonathan Korn said from tech stocks with rising valuations, “U.S. monetary authorities may not be so concerned about some air leaks. A broader and more devastating plunge will be needed to make an impact, “he said in a report.
Whipsawed
Nasdaq Composite corrections after the Global Financial Crisis
Source: Bespoke Investment Group
Original title:
Where’s That ‘Fed Put’? Scorched Dip Buyers Confront New Reality(excerpt)