{"id":645,"date":"2023-02-11T11:02:34","date_gmt":"2023-02-11T16:02:34","guid":{"rendered":"https:\/\/embarrdowns.com\/federal-reserve-rate-hikes-and-market-optimism-are-investors-becoming-too-confident\/"},"modified":"2023-02-11T11:02:35","modified_gmt":"2023-02-11T16:02:35","slug":"federal-reserve-rate-hikes-and-market-optimism-are-investors-becoming-too-confident","status":"publish","type":"post","link":"https:\/\/embarrdowns.com\/federal-reserve-rate-hikes-and-market-optimism-are-investors-becoming-too-confident\/","title":{"rendered":"Federal Reserve Rate Hikes and Market Optimism: Are Investors Becoming Too Confident?"},"content":{"rendered":"

In the past year, the Federal Reserve has been rapidly increasing interest rates in order to cool the economy and curb inflation[1]<\/a><\/sup>[0]<\/a><\/sup> Despite the warnings of experts and officials that the hikes could lead to an increase in unemployment, the Fed pushed its benchmark rate to a range of 4[1]<\/a><\/sup>5%-4[1]<\/a><\/sup>75% – the highest level in 15 years[1]<\/a><\/sup> However, the markets interpreted the FOMC statement and Fed Chair Powell\u2019s press conference as being more dovish than expected[0]<\/a><\/sup>[1]<\/a><\/sup> Powell noted that more rate hikes are required to make sure inflation continues to cool down[3]<\/a><\/sup>[1]<\/a><\/sup><\/p>\n

The S&P 500 US share index and the Nasdaq Composite, which are weighted towards America\u2019s tech giants, have both rallied since the start of the year[4]<\/a><\/sup>[1]<\/a><\/sup> The S&P 500 has gained nearly 9% and the Nasdaq has gained more than 16%, and the VIX index, which tracks investor expectations of volatility, has been below its long-term average of 20 for two consecutive weeks – the longest stretch of low volatility since the beginning of last year[4]<\/a><\/sup>[1]<\/a><\/sup><\/p>\n

Investors seem optimistic that if inflation is kept in check, the Federal Reserve’s interest rate increases could be coming to an end[2]<\/a><\/sup>[1]<\/a><\/sup> The sudden improvement in the global economic outlook has bolstered the optimists\u2019 argument and investors are becoming increasingly confident that the Fed can subdue inflation without causing a major recession[5]<\/a><\/sup>[1]<\/a><\/sup><\/p>\n

The assets that suffered the most during last year’s market crash are currently the highest performing ones[5]<\/a><\/sup>[1]<\/a><\/sup> The value of Bitcoin has risen by a staggering 40% and the ARK Innovation Fund managed by Cathy Wood, which is mostly comprised of tech stocks, has achieved an impressive 46% growth[5]<\/a><\/sup>[1]<\/a><\/sup> Mike Lewis, head of U[1]<\/a><\/sup>S[1]<\/a><\/sup> equity cash trading at Barclays PLC, said: \u201cPeople don\u2019t want to miss a rally \u2026 you get a little bit of FOMO.[1]<\/a><\/sup>\u201d<\/p>\n

Analysts and investors at large banks and asset managers such as Morgan Stanley, UBS Group AG and BlackRock Inc[1]<\/a><\/sup> have repeatedly argued that markets have been too optimistic, but stocks have so far largely shrugged off weak fourth-quarter corporate results[1]<\/a><\/sup><\/p>\n

Goldman Sachs\u2019 David Kostin said: \u201cDespite the recent rally, there are several reasons we believe upside to US equities remains limited and that the S&P 500 is unlikely to end the year substantially above our year-end target of 4000.[1]<\/a><\/sup>.[1]<\/a><\/sup>.[1]<\/a><\/sup><\/p>\n

0. <\/span>“Dow Jones, Nasdaq, S&P 500 weekly preview: Stocks rally likely over – analysts” StreetInsider.com, 6 Feb. 2023, https:\/\/www.streetinsider.com\/dr\/news.php?id=21165055<\/a><\/a><\/p>\n

1. <\/span>“Fearing to miss the rally, investors are pushing stock markets up” Business Review, 6 Feb. 2023, https:\/\/business-review.eu\/profiles1\/opinions\/fearing-to-miss-the-rally-investors-are-pushing-stock-markets-up-241238<\/a><\/a><\/p>\n

2. <\/span>“The Stock Market Is Rallying. Will It Last?” msnNOW, 8 Feb. 2023, https:\/\/www.msn.com\/en-us\/money\/markets\/the-stock-market-is-rallying-will-it-last\/ar-AA17fyqW<\/a><\/a><\/p>\n

3. <\/span>“The Stock Market Is Off To A Great Start In 2023 \u2014 Here’s How The Federal Reserve, Interest Rates May Cha” Benzinga, 9 Feb. 2023, https:\/\/www.benzinga.com\/analyst-ratings\/analyst-color\/23\/02\/30821783\/the-stock-market-is-off-to-a-great-start-in-2023-heres-how-the-federal-reserve-inte<\/a><\/a><\/p>\n

4. <\/span>“Investors pile into market rally as economic slowdown risk ebbs” Financial Times, 5 Feb. 2023, https:\/\/www.ft.com\/content\/53b883de-decf-4d84-bb5e-661bb855b1fd<\/a><\/a><\/p>\n

5. <\/span>“FOMO fuels market rally as investors assess risks of a recession are receding” Financial Post, 6 Feb. 2023, https:\/\/financialpost.com\/investing\/fomo-fuels-market-rally-investors-recession<\/a><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

In the past year, the Federal Reserve has been rapidly increasing interest rates in order to cool the economy and curb inflation[1]<\/a><\/sup>[0]<\/a><\/sup> Despite the warnings of experts and officials that the hikes could lead to an increase in unemployment, the Fed pushed its benchmark rate to a range of 4[1]<\/a><\/sup>5%-4[1]<\/a><\/sup>75% – the highest level in 15 years[1]<\/a><\/sup> However, the markets interpreted the FOMC statement and Fed Chair Powell\u2019s press conference as being more dovish than expected[0]<\/a><\/sup>[1]<\/a><\/sup> Powell noted that more rate hikes are required to make sure inflation continues to cool down[3]<\/a><\/sup>[1]<\/a><\/sup><\/p>\n

The S&P 500 US share index and the Nasdaq Composite, which are weighted towards America\u2019s tech giants, have both rallied since the start of the year[4]<\/a><\/sup>[1]<\/a><\/sup> The S&P 500 has gained nearly 9% and the Nasdaq has gained more than 16%, and the VIX index, which tracks investor expectations of volatility, has been below its long-term average of 20 for two consecutive weeks – the longest stretch of low volatility since the beginning of last year[4]<\/a><\/sup>[1]<\/a><\/sup><\/p>\n

Investors seem optimistic that if inflation is kept in check, the Federal Reserve’s interest rate increases could be coming to an end[2]<\/a><\/sup>[1]<\/a><\/sup> The sudden improvement in the global economic outlook has bolstered the optimists\u2019 argument and investors are becoming increasingly confident that the Fed can subdue inflation without causing a major recession[5]<\/a><\/sup>[1]<\/a><\/sup><\/p>\n

The assets that suffered the most during last year’s market crash are currently the highest performing ones[5]<\/a><\/sup>[1]<\/a><\/sup> The value of Bitcoin has risen by a staggering 40% and the ARK Innovation Fund managed by Cathy Wood, which is mostly comprised of tech stocks, has achieved an impressive 46% growth[5]<\/a><\/sup>[1]<\/a><\/sup> Mike Lewis, head of U[1]<\/a><\/sup>S[1]<\/a><\/sup> equity cash trading at Barclays PLC, said: \u201cPeople don\u2019t want to miss a rally \u2026 you get a little bit of FOMO.[1]<\/a><\/sup>\u201d<\/p>\n

Analysts and investors at large banks and asset managers such as Morgan Stanley, UBS Group AG and BlackRock Inc[1]<\/a><\/sup> have repeatedly argued that markets have been too optimistic, but stocks have so far largely shrugged off weak fourth-quarter corporate results[1]<\/a><\/sup><\/p>\n

Goldman Sachs\u2019 David Kostin said: \u201cDespite the recent rally, there are several reasons we believe upside to US equities remains limited and that the S&P 500 is unlikely to end the year substantially above our year-end target of 4000.[1]<\/a><\/sup>.[1]<\/a><\/sup>.[1]<\/a><\/sup><\/p>\n

0. <\/span>“Dow Jones, Nasdaq, S&P 500 weekly preview: Stocks rally likely over – analysts” StreetInsider.com, 6 Feb. 2023, https:\/\/www.streetinsider.com\/dr\/news.php?id=21165055<\/a><\/a><\/p>\n

1. <\/span>“Fearing to miss the rally, investors are pushing stock markets up” Business Review, 6 Feb. 2023, https:\/\/business-review.eu\/profiles1\/opinions\/fearing-to-miss-the-rally-investors-are-pushing-stock-markets-up-241238<\/a><\/a><\/p>\n

2. <\/span>“The Stock Market Is Rallying. Will It Last?” msnNOW, 8 Feb. 2023, https:\/\/www.msn.com\/en-us\/money\/markets\/the-stock-market-is-rallying-will-it-last\/ar-AA17fyqW<\/a><\/a><\/p>\n

3. <\/span>“The Stock Market Is Off To A Great Start In 2023 \u2014 Here’s How The Federal Reserve, Interest Rates May Cha” Benzinga, 9 Feb. 2023, https:\/\/www.benzinga.com\/analyst-ratings\/analyst-color\/23\/02\/30821783\/the-stock-market-is-off-to-a-great-start-in-2023-heres-how-the-federal-reserve-inte<\/a><\/a><\/p>\n

4. <\/span>“Investors pile into market rally as economic slowdown risk ebbs” Financial Times, 5 Feb. 2023, https:\/\/www.ft.com\/content\/53b883de-decf-4d84-bb5e-661bb855b1fd<\/a><\/a><\/p>\n

5. <\/span>“FOMO fuels market rally as investors assess risks of a recession are receding” Financial Post, 6 Feb. 2023, https:\/\/financialpost.com\/investing\/fomo-fuels-market-rally-investors-recession<\/a><\/a><\/p>\n","protected":false},"author":3,"featured_media":644,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[47],"tags":[],"_links":{"self":[{"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/posts\/645"}],"collection":[{"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/comments?post=645"}],"version-history":[{"count":0,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/posts\/645\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/media\/644"}],"wp:attachment":[{"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/media?parent=645"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/categories?post=645"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/tags?post=645"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}