Stock market hits brick wall of Powell’s Fed policy

THE United States Federal Reserve and the country’s stock markets have been on a collision course all year, and the collision may just have happened.

Stocks fell sharply on Wednesday (May 3) after the Fed raised its benchmark interest rate to a 16-year high of between 5 per cent and 5.25 per cent, and left the door open to further rate hikes this year even as it hinted at a pause in June.

For much of 2023, speculators had placed bets that the Fed would slam the brakes on growth so hard with its drastic hikes that it would bring on a deep recession or a financial crisis and be forced to pivot to rate cuts before the year was out.