[TOPIC] Fed Crushed Market; But SPX. Up Even With 20% Rate?

US stocks experienced roller coaster last night. 

Chart from Tiger Trade app

  1. $NASDAQ(.IXIC)$ closed down 1.79% at 11220.19, a new low since July 1;
  2. $S&P 500 (.SPX)$ was down 1.71% at 3789.93, a new low since June 30;
  3. $Dow Jones (.DJI)$ was down 1.7% at 30183.78, a new low since June 17.

1. Dot Plot Shows More Rate Hikes Than Expected

Powell's rhetoric was very hawkish, showing a determination to lower inflation.

I wish there were a painless way to get inflation down, but there isn't.

According to the latest dot plot, after the 75bps increase in September as expected, the benchmark rate is expected to reach 4%-4.5% at the end of the year, much higher than the 3.4% expected in June.

Dot plot from cnbc

Based on this plot, Fed will have to raise rates by another 125bps by the end of the year, with the first rate cut to wait until 2024. 

Let's look at analyst's expectations:

Chart made by Tiger Trade

2. More Rate Hikes Necessarily Means Market Crash? 

The market plunged mainly because the benchmark rate increased, and the expectation of a rate cut next year was crushed. So how will US stocks perform when more rate hikes are ahead?

Let's look at the historical performance during the Great Inflation when Volcker, the Fed chairman, raised the fund rate to 20% (compared to the current 4.5% expectations).

Chart from cnbc

1) Generally speaking, $S&P 500(.SPX)$ did fall into a bear market during this decade.

chart from real investment advice

2) But the greatest decline was not in the period when interest rates peaked (20%), but during the previous cycle of rate hikes. 

After all, the stock market is about expectations. The market crashed  when the rate was raised to around 15%, but continued upward momentum when the rate was increased to 20%.

chart from real investment advice

But the question is we don't know we are in the 1st or the 2nd cycle. It's hard to predict the market.

Do you think the stock market will rebound after the fear sentiment passed?

How do you comment on Volcker's aggressive rate hikes?

Will we repeat the Great Inflation?

Join our topic and post to win hundreds of tiger coins~

# Powell: More Pain Ahead - Will Market Rebound or Test a New Low?

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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  • Nanamoney
    ·56 minutes ago
    let's watch next week .think currently quite low and weak
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  • StarGate
    ·09-24 08:57
    another cycle of going down down until Fed stays...it's painful and nobody like it. Do watch for the market before you invest ...don't jump and drown
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  • Venus168
    ·09-24 07:44
    Does not look good in the near future but that also provide opportunity to buy at the dip
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  • LazyTitan
    ·09-23 23:50
    I think the market won't crash but will have corrections instead whenever the rate goes up because it's not like the fed is going to raise the rate like 200 or 300 basis points. Those companies which swim naked will be gone and the strong will survive. just look at how high the sp went after the great recession, it'll recover but nobody knows when. Just hope fed is not overreacting and kills the budding recovery.
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  • ThaiGirl
    ·09-23 08:24
    Well done
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    • 166otw
      kk
      09-23 10:19
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  • Brocco
    ·09-23 08:22
    Yes. Stock market will rebound. Rates hike are unavoidable, personally will rather them to be aggressive and get everything in control soon then to drag along~ hopeful great inflation will not happen
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  • Ztradee
    ·09-23 08:22
    Doesn't look good at all. [Sad]
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  • Venus_M
    ·09-23 08:17
    @HelenJanet @JoeLeong @爱上投资学 @SGT @Gackky @Wayneqq @MHh @Boo2020 @Huangyulee @Joker_Smile @RDPD富爸穷爸 @EndoGoh   @Success88 @Squ00 @kento @Fenger1188 @ariesyn @Soyabean89 @Sheepysheep @投资J @Pucca @pennylks @StayHome @Vomous @Bonta @BenjiFuji @Mongji

    👆

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    • Jadenkho
      My comments go to the main page[LOL]
      09-23 08:34
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    • JadenkhoReplying toJadenkho
      Thanks for tagging me in here again and Welcome back[Heart]
      09-23 08:34
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    • HelenJanet
      Thanks for sharing 👍[Love]
      09-23 09:06
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  • Venus_M
    ·09-23 08:17
    @Enereskob @Kaixiang @DiAngel @滚股怪 @rL @Yan23 @Zacyai @Jadenkho @Ron18 @J817 @hengsley @highhand  @Huat99  @Brocco @Cris0 @DancingOwl @Khikho

    👆

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    • highhand
      Hi 👋
      09-23 08:26
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    • Venus_MReplying tohighhand
      hi my ✋  [love you]
      09-23 08:29
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    • JadenkhoReplying toVenus_M
      [Heart][Heart][Heart]
      09-23 08:35
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  • YJ13
    ·09-23 07:19
    I will start to accumulate $SPDR S&P 500 ETF Trust(SPY)$
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  • noobiee
    ·09-22
    Stupid me didn't know fed meeting
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  • luckyone
    ·09-22
    light at the end of tunnel soon?...
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  • SanBarbara
    ·09-22
    Wow~ [Miser][Miser]
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  • StickyRice
    ·09-22
    The move pushed the rate to the highest level since before the 2008 financial crisis. With yesterday’s hike, the Fed delivered the most aggressive tightening since Paul Volcker in the early 1980s.
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  • Samuellow88
    ·09-25 22:27
    Ok
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  • TIGGY
    ·09-24 12:48
    Ok
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  • thjiuan
    ·09-23 21:08
    o k
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  • BossBoss
    ·09-23 17:46
    😇
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  • Clng
    ·09-23 15:17
    Ok
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  • JLwinwin
    ·09-23 10:59
    good
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