Strong Stock Market Recovery Means Investors Have Faith in Powell’s Forward-Looking Outlook
The U.S. stock market made a spectacular recovery shortly before the cash market close on Friday with some investors treating the intraday sell-off as a buying opportunity ahead of the U.S. consumer inflation data on December 13 and the upcoming Federal Reserve monetary policy statement and interest rate decisions on December 14.
The stock market rebound suggests one bearish data point will not be enough to derail the bullish comments from Fed Chair Powell. Nonetheless, he did caution that monetary policy is likely to stay restrictive for some time until real signs of progress emerge on inflation.
Traders may have raised interest rate expectations for March and May after the jobs report, but keep in mind those expectations can be reduced with just one cooler than expected CPI report.
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