“It would stand to reason that if the Fed is going to slow, they are not anxious to slow the economy in order to fight escalating inflation, rather just tap the brakes a bit, which would still allow the economy to grow at a reasonable pace and therefore enable stocks to do relatively better than if the Fed was pushing hard on the economic brakes,” Brad Sorensen, director of market and sector research at the Schwab Center for Financial Research, said in the article.
Moreover, John Lonski, chief economist at Moody’s, argues that a gradual hike would help lessen fears that higher rates would suddenly spike and affect potential costs, like higher borrowing fees and lower consumer spending.
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Max Chen contributed to this article.
Full disclosure: Tom Lydon’s clients own shares of IVV and SPY.