Fed: US Stock Market Outlook Unchanged in Growing Economy
$DIA, $SPY, $QQQ, $VXX
Fed officials played down recent volatility in global stock markets, sounding as resolved to push ahead with gradual increases in interest rates as before the pullback.
“Having a bump like this has virtually no consequence in my view of the economic outlook,” New York Fed President William Dudley said Wednesday at an event in New York. “My outlook hasn’t changed because the stock market is a little bit lower than a few days ago. It’s still up sharply from where it was a year ago.”
“That said, if the stock market were to go down precipitously and stay down, then that would actually feed into the economic outlook and that would affect my view in terms what’s the implications for monetary policy,” he said.
“Generally, market functioning seems to be pretty good,” Mr. Dudley said. “There was a period Friday where there was a very sharp movement downward around 3 o’clock in the equity market. That is something we have to look at and evaluate what really caused that. But I think generally liquidity is pretty good.”
Mr. Dudley also raised questions about whether some financial products tied to market volatility were well put together.
“Some of these VIX products, I think, people now are going to look at this with the benefit of hindsight and say, ‘Were these really well designed?’,” he said. “This wasn’t that big a bump in the equity market and these products actually blew up.”
“To the extent the markets see something that is different from what the Fed sees, it is important information,” he said. “It is not so clear to me here that there is a story like that — that the US economy is not as robust as we thought it was.”
“So far this is a big story in the press,” the New York Fed chief said at an event sponsored by Thomson Reuters Corp. and the European American Chamber of Commerce. “It’s a big story for financial market participants. But I don’t think it’s a big story at all for central bankers.”
The US stock market is in a long term up trend and overall Bullish in this strong/growing economy, do not expect any interest rate hikes to affect it.
Wednesday, the major US stock indexes came in at: DJIA -19.42 at 24893.35, NAS Comp -63.90 at 7051.98, S&P 500-13.48 at 2681.66
Volume: Trade on the NYSE came in at : 1.14-B/shares exchanged
- NAS Comp: +2.2% YTD
- DJIA: +0.7% YTD
- S&P 500: +0.3% YTD
- Russell 2000: -1.8% YTD
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