Stocks may be headed for a big drop

Stocks began to slide on August 16, after a two-month rally, as investors began to realize that the Federal Reserve was unlikely to back down on interest rate hikes anytime soon.

After Fed Chairman Jerome Powell made it clear in a speech on Aug. 26 that indeed the Fed has no intention of backing down from raising interest rates, the S&P 500 fell 3.5%. And the descent may still have a long time to go.

Powell said rising interest rates are likely to hurt the economy. “It wasn’t the Powell that we usually see where he’s trying to be more balanced,” Lee Ferridge, head of macro strategy at State Street Global Markets, told The New York Times.

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