The Federal Reserve implements interest rate hikes or cuts？

Generally speaking, the Federal Reserve implements interest rate hikes or cuts. Interest rate rises are austerity monetary policies, and interest rate cuts are a loose monetary policy. When the rate hike cycle begins, it indicates that the Federal Reserve is optimistic about the future economic outlook, economic data shows a positive outlook, and market sentiment is optimistic. To avoid excessive economic growth, the Federal Reserve has implemented austerity monetary policy and implemented interest rate hikes. When the interest rate cut cycle begins, it means that the Federal Reserve is bad on the future economic outlook, the economic data shows a bad trend, and the market is pessimistic. To stimulate economic growth, the Federal Reserve has implemented a loose monetary policy and implemented interest rate reductions.

Correlation between the S & P 500 and Federal Reserve interest rates

Historical data from the S & P 500 shows that when the rate hike cycle begins, the stock market continues to rise, and when the rate cut cycle begins, the stock market continues to fall. Therefore, when the Federal Reserve increases interest rates, it is a good time to buy assets, and the Federal Reserve reduces interest rates, it is a good time to sell assets.

As an investor, the Federal Reserve can raise or lower interest rates to determine whether the future economic outlook is better or worse, but it can only judge the long-term trend of the economy. Also, different countries implement interest rate hikes or interest rate cuts, which have different meanings. For example, some countries with excessive inflation implement national interest rate hikes to stabilize the local currency exchange rate, not optimistic about the economic outlook.

In short, the stock market is a reflection of the market economy, and the Federal Reserve ’s implementation of interest rate increases or reductions is a leading indicator of the stock market. It can determine whether the market economy is growing or declining. As an investor, you need to know whether it is in the interest rate increase cycle or the interest rate reduction cycle to judge the long-term trend of the stock market and make correct investment trading decisions.

Comments

Will the Great Depression make a comeback?

the Great Depression On March 21, 2020, the United States already had initial unemployment data. Exceeding market expectations, the number of applicants reached 3.28 million, a record high. The current unemployment situation in the United States. Before March 7, employment in the United States was not affected by the epidemic. In the week of March 7, the number of people applying for unemployment benefits for the first time in the United States was 211,000, a decrease of 4,000 compared to the previous week. It is still healthy. This shows that the United States is in a good employment track range. The actual data began to fluctuate, that is, the data for the week of March 14, the number of people applying for relief reached 282,000, a slight increase. On March 21, the number of people applying for unemployment benefits soared to a record high this week. 1.7 million people have far exceeded expectations, and market expectations are about 1.5 to 1.7 million people. It can be said...

Tesla(TSLA) stock forecast 2025: Ark Invest's valuation model

Ark Invest’s underlying logic and news about the latest Tesla ( TSLA ) valuation Let’s take a look at how Ark Invest’s Cathie Wood views the stock market that is currently rotating. Ark Invest’s underlying logic and news about the latest Tesla ( TSLA ) valuation. Ark Invest's underlying logic, Next is what Cathie Wood said in an interview with Bloomberg. "We have been paying attention to the fluctuation of stock prices, but our investment period is 5 years. When we experience a callback like this, the fund sector rotates very fast. I am very happy that the bull market is now expanding to other types of stocks. In 2016 At the end of the year, the share price of value stocks took off, and they were far away from growth stocks. Whenever I saw such a signal, I would say: Very good! This shows that the funds of the bull market are spreading to other stocks. This is good news. Over time, we have concentrated on investing in stocks that are particularly promising in our portfolio. Th...

Investors have begun to switch back to traditional growth stocks

On Thursday, the stock prices of Cisco, Alphabet, and IBM hit new highs. But more importantly, the previously unpopular speculative growth stocks, including stocks bought by many ARK funds, have now begun to rebound. How is this going? Investors' perspective on the market is changing. In the first quarter of this year, mainstream voices in the market believe that the economy will restart strongly, bond yields will rise, and inflation may become a problem later this year. After the end of the first quarter, these expectations were only partially fulfilled. The U.S. economy has indeed restarted strongly, but bond yields fell in the first quarter instead of rising because investors began to believe: 1) Inflation and supply chain disruption may indeed be "temporary", as the Fed insists; 2) The second and third quarters will be the highest points of stock returns and economic growth. Alec Young, a chief investment officer of Tactical Alpha, said: “...

Intel, Twitter, and Snapchat stock forecast 2025: latest quarterly earnings reports

Three technology companies, Intel, Twitter, and Snapchat, released their latest quarterly earnings reports. Let's take a look at their performance and the key information revealed at the earnings conference. Intel(INTC) stock forecast 2025 Several important data on Intel's earnings report beat expectations. Among them, earnings per share were US$1.28, higher than the expected US$1.06, an increase of 12% over the same period last year; total revenue was US$18.5 billion, beating analysts’ expectations of US$17.8 billion. However, in Intel's guidance for the next quarter, the Non-GAAP gross profit margin given is only 55%, which is far lower than the market's expected 59.2%. The reason given by Intel is that it is worried that supply chain problems will limit profitability, and the expected chip manufacturing business will bring additional costs. For chip companies, the market is most concerned about gross profit margin. TSMC fell last week b...

3 Chinese technology stocks forecast 2025: JD PDD and BZUN

Forget Alibaba（BABA)! These 3 Chinese technology stocks are more worth buying 　　 Hello everyone, Alibaba is China's largest e-commerce and cloud company. From January to late May, Alibaba's market value has shrunk by nearly 10%, lagging behind many peers. Antitrust investigations in China, stricter auditing standards in the United States, and funding from growth stocks to value stocks have all dragged down Alibaba's stock price. 　　 Alibaba’s stock is trading at an expected price-to-earnings ratio of 18 times, which may seem cheap, but analysts still expect Alibaba’s earnings to fall by 3% this year because it has absorbed a record US$2.75 billion in antitrust fines. It also needs to stop exclusive deals with big brands, which may weaken the company's defenses against smaller e-commerce markets. 　　 But this is not all. Alibaba may be forced to divest media assets and share user data with the government, and the group's financial technology su...

SQ, TDOC, VRTX: Cathie Wood is optimistic about doubling stocks

When Cathie Wood buys stocks, investors will follow her to buy, which seems to be the latest trend in the investment world. In the popular saying, following Cathie Wood, there is money to be made. Even some time ago due to the rise in U.S. Treasury yields, technology stocks plummeted, and ARK funds suffered a frantic sell-off. Wood is still as stable as a mountain, and he issued a statement saying that everything was as early as we expected and was better than we expected. Technology stocks are a good time to buy bottoms and increase positions. Today, I will analyze Cathie Wood's heavy holdings from the company's fundamentals and future market prospects. Can it double in the long run? Square (ranked first in ARKK's innovative technology ETF) The financial technology giant Square is a revolutionary stock in the financial industry, breaking the traditional payment industry. Square is known for its seller ecosystem, which provides small businesses ...

Can Apple（AAPL） icar end the dominance of Tesla（TSLA）?

Beginning in 2014, Apple started a plan for electric vehicles developed by "Project Titan". In the Apple electric car project, in the past few years, internal conflicts, leadership issues, and other issues have affected the entire project. The rumors in 2016 even hinted that Apple had shelved plans for the car, but Apple has overcome the development difficulties and still plans to develop consumers Car, The Apple car project has changed the leadership many times, and hundreds of employees have been laid off during the development process. In the past few years, there have been rumors that Apple has shifted its focus to autonomous driving software instead of just a car. In June 2017, Apple CEO Tim Cook publicly talked about Apple’s work on autonomous driving software, which rarely confirmed Apple’s development work, because Apple usually does not share the details it is studying, but when it comes to cars When it comes to software, due to legal restrictions, it has to apply fo...

FinanceLinkway

Search This Blog