Stock investors who were too optimistic about the economic outlook may be disappointed and the stock market rally will fade, according to strategists at JPMorgan Chase & Co.

(Reuters)

[Financial Channel/Comprehensive Report] A strategist at JPMorgan Chase said that stock investors who are too optimistic about the economic outlook may be prepared to be disappointed, and the stock market rally will fade.

In a note, a team led by Mislav Matejka said a recession is off the table after the Fed's aggressive rate hikes, not least because the impact of monetary policy on the economy may lag by one to two years .

The Fed is likely to adjust policy only in response to a more negative macroeconomic backdrop than markets had expected, they said.

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Stocks have historically not bottomed out before the Fed pushes ahead with rate cuts, and have never seen a low before stopping rate hikes, strategists said on Monday. The damage has been done and the fallout may still be ahead of us.

Global stocks have rallied this year as hopes for a policy shift by the Federal Reserve, the reopening of China and an easing of the energy crisis in Europe have provided support, but renewed signs that inflation remains a long-standing problem in the United States have weighed on markets.

Comments from hawkish officials also raised concerns that U.S. interest rates could peak higher than previously expected.

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