The Fed’s prolonged efforts to curb stubbornly high inflation did show some results in the near past, which raised anticipations of the Fed downsizing its rate hikes and putting a pause soon. A fresh bout of investor optimism followed.
However, January’s Consumer Price Index (CPI) slowed only slightly to a 6.4% annualized gain, higher than the market forecast of 6.2%. In addition, the U.S. employment report showed that the labor market is running hotter than expected. Moreover, with significant retail sales growth of 3%, the Fed could keep the rates higher for longer than the market’s anticipation.
Since inflation is far above the central bank’s target of 2%, Fed Chair Jerome Powell signaling more rate hikes, said, “I think there has been an expectation that it’ll go away quickly and painlessly and I don’t think that’s at all guaranteed … It will take some time, and we’ll have to do more rate increases.”
Furthermore, as the cost of living soars, Americans have started financing their new spending habits with credit cards and draining their savings. Experts fear a spending slowdown or a recession could be on the horizon. With the odds of a recession soaring, a bear market could be expected in the upcoming months.
Amid such volatilities, quality stocks, Walmart Inc. (WMT) and…
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