Markets Now Fear the Fed’s Waiting Game Is Too Long
What a difference a day makes. After rising on expectations of a September rate cut, stocks sell off after a slew of data points to recession.
One day at a time for the Fed and markets.
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Data-dependency can be painful. Wednesday finished on a high for the US stock market as investors reacted to strong hints from the Federal Reserve that it would be cutting rates in September. Thursday, however, saw a selloff as some downbeat economic data immediately prompted fears that the Fed had made a mistake and should already have cut.
If the Fed is wrong, note that the market’s behavior this week suggests that plenty of others would have made the same mistake. One big data point against the FOMC: the latest jobless claims numbers. Taken in conjunction with the figures on continuing claims, which come out every two weeks, they’re now on a clear rising trend, and their highest since late 2021: