Investors should brace for more volatility in stocks in the coming months, said James McCann, deputy chief economist at abrdn, after the Federal Reserve on Wednesday bumped up rates to a 5.25%-5.5% range, the highest in 22 years.
“We are pretty cautious on equities,” McCann told MarketWatch after the Fed raised rates by a quarter point, as expected, but indicated future rate hike could be possible in the coming months. Stocks closed mostly lower Wednesday, but the Dow Jones Industrial Average DJIA booked its 13th straight session of gains, ending 3.5% off its record close in January 2022, according to Dow Jones Market Data. The S&P 500 index SPX ended fractionally lower, off 4.8% from its last record close and the Nasdaq Composite Index COMP shed 0.1%.
A key inflation gauge, the consumer-price index, fell to a 3% annual rate in July, after peaking at 9.1% last year. The drop comes as the cost of oil, homes, food, cars and more have come off peak pandemic levels, and some rate-sensitive parts of the economy, like housing, have been fairly resilient.