The economy of the United States remains uncertain with the looming threat of a recession. This has caused worry among investors, who are not only monitoring the possibility of a recession but also keeping a close eye on the actions of the Federal Reserve. Following the recent report on the US GDP status, investors anticipate an upcoming rate hike, possibly within the current week.
Sam Stovall, the chief investment strategist at CFRA Research, shared his insights with CNBC, stating that investors are likely expecting a second consecutive quarter of decline in Thursday’s GDP report, which serves as an informal indicator of a recession. He mentioned that while the Federal Reserve might announce a 75-basis-point rate increase on Wednesday, they might adopt a more tempered approach towards further rate hikes. This could lead to a continued counter-trend rally in the short term.
Despite the prevailing concerns, investors are striving to maintain a positive outlook regarding the potential improvement in corporate earnings. Despite the general downturn observed in major stock indexes, they have actually been performing relatively well this month.
At the commencement of a pivotal week for global markets, US stock futures have shown a slight uptick in anticipation of the Federal Reserve’s impending policy decision and a significant number of forthcoming corporate earnings reports https://t.co/pf9vzEx29W
— The Wall Street Journal (@WSJ) July 25, 2022
“Stocks have experienced a rally this month and overcome prevailing concerns. The surge has been primarily driven by cyclical and Growth stocks, supported by the stabilization of long-term yields, thus alleviating the pressure on Price-to-Earnings ratios,” noted Emmanuel Cau of Barclays in a message to investors.
