Even if what you expect to happen does indeed happen, that doesn’t always mean it’s comforting.
Case in point, most of us expected the Fed to raise interest rates by up to 0.50% during its announcement on Wednesday… and that’s exactly what happened.
They announced “… the Committee decided to raise the target range for the federal funds rate to 3/4 to 1 percent and anticipates that ongoing increases in the target range will be appropriate.”
The market is still in flux as a result, especially because rate hikes may continue throughout 2022, according to the CME Group’s FedWatch tool.
With the additional specter of inflation looming, volatility may continue for the next week.
Market volatility is very high right now. Traders were euphoric on Wednesday after the Fed downplayed the odds of a 0.75-point rate hike in June, only to be followed Thursday by renewed worries about inflation and slowing economic growth.
The monthly labor report comes out tomorrow, and traders are nervous about growth. Seeing a little wild buying and selling is fairly normal the day or two before a big announcement like that.
Should You Buy the Dip?
Looking back to earlier in the week, we covered the dip in the market Monday during our livestream.
Long story short, yes, investors should buy the dips. While it’s human nature to want to seek shelter in a proverbial storm, many stocks that were previously overvalued or too pricey have now sunken – albeit temporarily – to more affordable prices, making it an ideal time to scoop up some shares.
However, a market dip should not be misconstrued as a “free-for-all;” you should still exercise the utmost caution. And in Monday’s livestream, we discussed what’s spooking traders, Fed announcement implications, and why it’s hard to remain rational while the market is so crazy.
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Did the Fed Just Save or Kill Stocks?
During last night’s livestream, we took a look at how stocks rallied on Wednesday after the Fed squashed concerns of future 3/4% rate hikes. But Wall Street woke up on the wrong side of the bed yesterday, marking one of the worst days in the S&P 500 in years as it dropped back down and is re-testing the support range at which it’s been sitting.
There are a number of things the market is trying to digest and get used to, like the competing factions of dip-buyers and strength-sellers duking it out. Not only that, but we are seeing a lot of volatility here and have a lot to unpack as to where we might go in the future. With the 10-year Treasury yield above 3%, can the stock market recover? Check out the replay from last night to find out more.
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