Those of you who’ve been watching for a while know I like to say the first move after the Federal Open Market Committee’s latest meeting is usually the wrong move…
And the latest Fed rate hike was a doozy…
The U.S. central bank announced a 0.75% benchmark interest rate hike to a range of 1.5% to 1.75%, its biggest hike since the Clinton administration way back in 1994.
Fed Chair Jerome Powell admitted the move was unusual and said he didn’t expect hikes this big to be common moving forward. He also said he expects the Fed to raise rates again in July, either 50 or 75 more basis points, and stocks rallied hard on the news — the wrong move.
There was no shortage of talking heads on CNBC claiming that the worst was over and a market bottom was in…
Then the bottom fell out Thursday morning… By lunchtime on the East Coast, the Dow was down over 750 points while the S&P 500 and Nasdaq sank 3.3% and 4.1%, respectively. So we gave back all the gains and then some in a flash, especially growth stocks, which got taken to the woodshed.
The Latest Fed Rate Hike
According to projections, the Fed’s benchmark will end the year around 3.4%, which is 1.5% higher than the March estimate.
The central bank also cut its 2022 growth outlook and expects a 1.7% GDP gain compared to a 2.8% estimate in March.
The next FOMC meeting is July 27, and we’ll likely have the highest interest rates we’ve seen in five years. This creates a lot of stress in credit and financing around the world.
A lot of people are looking at the 3,600 level on the S&P 500 as a place to get long — we were at 3,670 late Thursday afternoon, so not that far off.
But the truth is we’re under a new market regime. We’re in a devastatingly bad downtrend and a bear market. There’s no sugarcoating it. We are in a bear market even by the most technical definitions of a 20% drop from a recent high.
But there’s something else I’m concerned about…
Check out my video above and let’s break down the latest Fed rate hike and what’s next. I have key levels to watch in the major indices.
Are there any topics you’d like to see me cover or questions you’d like answered? Send me an email at jeff@joyofthetrade.com! And be sure to stay ahead of the markets by subscribing to our YouTube channel and our Instagram page for all of the latest!
Pull out your phone right now and mark down this date…
Sept. 1, 2022.
This could be the start of something MASSIVE.
Many people could get wrecked — losing thousands or even hundreds of thousands of dollars…
But I believe that a handful of smart investors could stand to mint fortunes on this $1.5-trillion event.
