U.S. equity markets started the year on a shaky note by falling some 10% through mid-February. Most of the selling pressure came from perceived weaknesses globally, which engendered heightened fear of a recession. In the end, the market recovered as negative views were supplanted in favor of more positive perspectives.<\/p>\n
Nevertheless, in March, the Federal Reserve shifted to a more dovish tone indicating, fairly explicitly, the intent to slow the pace of rate hikes this year (edging away from the original plan).<\/p>\n
Fed Succumbing to Short Term Volatility?<\/strong><\/p>\n The Fed\u2019s 25 basis point hike in December was consistent with the Fed\u2019s long-term objective of normalizing interest rate policy; desired as the economy expands at a modest but acceptable pace and as labor markets improve. But, the Fed appears to have lost sight of the long-term objective by altering course on monetary policy; believed in response to stock market volatility and the accompanying negative headlines.<\/p>\n Bottom Line for Investors<\/strong><\/p>\n While barely into the first couple of months of the tightening cycle, a reversal in the Fed\u2019s monetary stance could be a sign of nervous governance. At Zacks Investment Management, we believe it is imperative, long-term, that the central bank remain focused on economic fundamentals and long-term goals versus short-term thinking relative to market volatility. Not only does this approach build credibility for the world\u2019s most important central bank, it also allows markets to price-in future rate hikes with certainty \u2013 which could go a long way toward reducing volatility. Stay the course, Fed.<\/p>\n \n","protected":false},"excerpt":{"rendered":" U.S. equity markets started the year on a shaky note by falling some 10% through mid-February. Most of the selling […]<\/p>\n","protected":false},"author":1,"featured_media":4124,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[71,72],"tags":[],"class_list":["post-3187","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-private-client-group","category-steady-investor-news"],"acf":[],"yoast_head":"\n