2 Days Post the Fed’s Decision on Interest Rates (9-20-2022) and the Markets are Still Dropping

Tom Gentile

Posted in Big Picture

By: Tom Gentile on September 22nd, 2022 • 2 mins read

The S&P500 is down 0.8%, almost 1% on the day,  This the second day in a row the markets are trading lower. Yesterday the Fed raised rates again and the markets had its typical bout of volatility on the announcement, but ultimately ended up much lower on its close. 

The chart of the SPY. the tracking ETF of the S&P500, shows the markets are looking more like they will attack the June lows. Right now, we can’t see an argument to say otherwise.

Figure 1: 100-Day Candelstick Chart on SPY
Figure 1: 100-Day Candelstick Chart on SPY

Chairman Powell almost always speaks after the Dedersal Reserve makes its decision on interest rates known.

Wednesday, September 20, 2022, the Fed raised things 3/4 of a basis point for the second time ina row.

His commentary didn’t do anything to waylay investors fears about a pending recession.  He / they said they could be bringing short-term rates as high as 4.4% by the end of 2022.

Some financial pro’s on financial news networks have expressed conern if other countries are going to follow suit in raising their interest rates and information gained is other central banks worldwide followed the Fed’s lead by implementing their own hikes overnight.

The concern is the Fed may raise rates too aggressively and end up sending the US into a recession all the while having the goal and intent to stave OFF inflation.

S&P 500 Price Target for 2022 Slashed

Wall Street firm Everscore ISI cut its 2022 year-end price target for the S&P to 3,975 from 4,200.

This new target still ahs the S&P  5% higher than Wednesday’s close, but that would result in it seeing a  16% decline for the year.

The Federal Reserve’s signal that it may risk a recession in its inflation fight prompted Evercore ISI to slash its market forecast today, Thrusday September 22, 2022.

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