Stocks To Rise On Fed 'Hike And Pause,' Says JP Morgan

The trading desk of JPMorgan Chase & Co. predicts a likely boost for stocks following Wednesday’s Federal Reserve announcement, Bloomberg reports.

Fed’s Impact on Stocks: The team, including Andrew Tyler, suggests that an interest-rate hike coupled with indications of a pause at the next meeting could push the S&P 500 as much as 0.75% higher.

They have assigned a 65% probability to this “Hike and Pause” scenario, which they believe is twice as likely as the Fed continuing to tighten monetary policy in the coming months.

“We think the Hike & Pause scenario is more likely with potential upside risks that the Fed may confirm the end of the cycle earlier at Jackson Hole,” the team wrote.

“Any language that the market interprets as the Fed may pause after one hike should support bonds and stocks.”

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Investor Sentiment: For investors who experienced a harsh selloff in 2022 due to the Fed’s aggressive inflation-fighting measures, the prospect of an end to the hiking cycle is welcome news.

However, a survey by 22V Research LLC found that only about a quarter of respondents see the prediction for Fed day as positive for risky assets.

Despite skepticism, equities have recovered their losses since the Fed began raising rates 16 months ago, with the S&P 500 now trading roughly 5% above where it was at the start of the hiking cycle.

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Posted In: NewsMarketsAnalyst RatingsMediaGeneralAndrew TylerFederal ReserveJP Morgan Chase & Co.
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