How will the stock market respond to an eventual reduction of monetary stimulus? In the past, the equity market has shown mixed results during the initial stages of Fed tightening cycles. See attached chart.
This should come as no surprise, if we stop to think about market processes. Equity prices are influenced by the Fed, but the Fed is also influenced by equity prices. Historic market behavior is something to keep in mind as we navigate the sea of opinion surrounding next week’s FOMC meeting.
© Charter Trust Company
