If Q3 Earnings Come In Slightly Higher Than Est, Market May See A Rally: Spartan Capital Sec
September 21, 2023
Treasury Yields Fall From New Highs
September 25, 2023Last Updated: Sept. 21, 2023 at 2:24 p.m. ETFirst Published: Sept. 21, 2023 at 5:07 a.m. ET
By Joy Wiltermuth Joseph Adinolfi
What’s driving markets
Stocks fell as investor fears of a potential recession in the U.S. were reawakened by fresh indications that the Federal Reserve expects interest rates to stay high through next year.
“The Fed thinks they can have a smooth landing, but if you raise rates and keep them at a hefty level for a sustained period of time, and oil prices move against you, how long can the consumer last?” said Peter Cardillo, chief market economist at Spartan Capital Securities, in a phone call.
“Today’s losses are an extension of yesterday’s market erosion into the end of the day,” Cardillo said. “You have bond yields making new 2006-2007 highs and a strong dollar. All of this is contributing to the fear factor.”
The Fed’s revised “dot plot” forecast released on Wednesday fortified a view that the potential path of interest rates could remain higher for longer, with the central bank’s policy rate pegged to remain above 5% for some time. That could put stress on companies and landlords with trillions of dollars of debt coming due, and weigh on stocks.
See: Fed’s revised dot plot for interest rates makes wall of maturing debt a bigger worry
Higher interest rates could be problematic for highflying growth stocks in the weeks and months ahead, said Eric Diton, president and managing director of the Wealth Alliance, by phone.
