Stock bulls won’t find much to celebrate in Fed’s pause

INVESTORS have traditionally made a lot of money buying stocks when the Federal Reserve delivers the last increase of a rate-hiking campaign. But not every interest-rate apex is the same, and this “hawkish pause” looks particularly precarious for equities.

First, consider the wording that the Fed used to communicate the change in its posture on Wednesday (May 3). In announcing its latest 25-basis-point increase in the Fed funds rates to a range of 5 per cent to 5.25 per cent, the US central bank also removed this key wording from its post-meeting statement (in the third paragraph):

The Committee anticipates that some additional policy firming may be appropriate ...