Federal Reserve Chairman Jerome Powell sent a clear signal interest rates will move higher and stay there longer than previously anticipated. Investors wonder if that means new lows for the beaten-down stock market lie ahead.
The market is now pricing in an over 66% chance of just a half percentage point rate increase at the Fed’s December 14 meeting, according to the CME FedWatch Tool. That would leave the fed-funds rate in a range of 4.25% to 4.5%. However, government data shows on Friday the U.S. economy gained a surprisingly strong 261,000 new jobs in October, surpassing a Dow Jones estimate of 205,000 additions. Perhaps more encouraging for the Fed, the unemployment rate rose to 3.7% from 3.5%.
Related: Here’s why the Federal Reserve let inflation run up to a 40-year high and how it roiled the stock market this week Powell said Wednesday that there remains a chance that the economy can escape a recession, but that window for a soft landing has narrowed this year as price pressures have been slow to ease.
What Marketwatch wants to say: Did we mention that the Fed Chief is White?
I made this video last week, I have been trading since 1994
Gradually raising rate never work. You would raise 500 points at once and be done with it.