The Tell: Fearing a hawkish Fed? Here’s what’s likely limiting more downside in the stock market, according to JPMorgan’s Marko Kolanovic.

by | Sep 19, 2022 | Stock Market

The stock market has been under pressure since the inflation report for August came in surprisingly strong last week, but JPMorgan Chase & Co.’s chief market strategist, Marko Kolanovic, doesn’t see this year’s drop getting much uglier despite a hawkish Federal Reserve. “While we recognize that more hawkish central-bank pricing and the resulting increase in real yields are weighing on risk assets, we also believe that any downside from here likely would be limited,” Kolanovic said in a JPMorgan research note Monday. “Robust earnings, low investor positioning and well-anchored long-term inflation expectations should mitigate any downside in risk assets from here.” 

Investors have been bracing for a jumbo rate hike from the Fed on Wednesday, the day central-bank chief Jerome Powell will hold a press conference on its latest policy decision as it battles high inflation. The S&P 500 is already down around 18% so far this year amid concern over rising interest rates and the persistently high cost of living in the U.S. JPMorgan’s Kolanovic has a more optimistic view of the stock market compared with some other investors and analysts on Wall Street, including warnings from Morgan Stanley that equities could take another leg down and rete …

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