Market Update

1. The Federal Reserve’s decision to raise interest rates by 0.75% on Wednesday was expected by the market. The stock market initially rose but fell sharply after Fed Chairman Jerome Powell spoke at the press conference. The S&P 500 fell 3.5% from its intraday peak.

• The market rose when the Fed mentioned that the interest rate hike will not become effective immediately and may have a restraining effect on future prices. The market became optimistic that the Fed would start to suspend interest rate hikes. It then turned lower when Jerome Powell mentioned that the interest rate hikes may slow in December, but it is too early to tell when the rate hikes will end. In addition, the final target rate may be higher than originally estimated in September and may remain there for some time.
• The market performance on Wednesday could be viewed as a summary of the stock market since mid-June. The market rose because it believed the Fed will slow down rate hikes. On the other hand, these actions may end up preventing the Fed from controlling inflation. The Fed will continue its hawkish stance to lower market expectations. Therefore, we mentioned earlier that if investors want to invest based on the Fed policy, they should at least wait until the Fed has made a decision.

2. The market interpreted Friday’s jobs report positively, but we maintain a neutral outlook. Overall, we will expect rebound after this wave of decline has eased and technology stocks have stabilized.