Saturday, November 2, 2024

The Fed lowering rates in April would negatively impact the markets – analyst

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FED The Federal Reserve System with jigsaw puzzle paper, the central banking system of the United States of America.

sasirin pamai

The Federal Reserve should hold rates as they are, not lower them, said Paul Hickey, Bespoke Investment Group co-founder.

In a CNBC interview, he said that the best thing for the market would be for the Fed not to cut interest rates in April, because that would mean bigger problems ahead.

The Federal Reserve decided to pause interest rate hikes in September and November, after hiking 25 basis points in July.

Hickey said he believes the Fed is done hiking rates.

“If you look at the way the market has performed this year, the ebbs and flows in the market, and you compare it to the typical pattern going back to the 50s, it has followed step by step throughout the course of the year,” he said.

There was only a brief period, early in October, when things got “a little dicey,” at the start of the Israel-Hamas conflict, he said. “So, if that pattern is to continue, you can certainly see strength into the new year.”

He also said he expects December to finish strong for the markets (NYSEARCA:SPY), (DJI), (COMP.IND), as it is historically the most positive month of the year.

On Nov. 14, small caps outperformed the S&P 500 (SPY) by 3.5 percentage points. “It happened five other times in history,” he said.

And leading into that period, the Russell 2000 (NYSEARCA:IWM) oversold for 34 straight trading days.

“That has only happened four other times throughout history,” he added. “And it has been followed by positive returns for small-caps every time.”

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