Federal Reserve Board Chairman Jerome PowellAlex Wong/Getty Images
Good morning. A sea of red has throttled the stock market in recent months, and Wall Street seems to think that things will only improve if the Fed pumps the brakes on tightening.
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1. Wall Street needs "Fed pause" to save the market. But it isn't so straightforward. Stocks won't hit the bottom until the central bank halts its tightening cycle, the consensus among experts seems to be.
Fed tightening is the market's biggest headwind, DataTrek Research analysts said. The Nasdaq and S&P 500 are down roughly 30% and 20% year-to-date, respectively.
But for the Fed to ease up, Stifel said the central bank must observe three things:
Lower gas prices
Lower inflation
Lower GDP growth
In other words: Bad news may be good news for investors, and the Fed likely welcomes the current downturn as an inflation-busting tool, DataTrek said.
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"Lower stock prices tell companies to stop hiring so aggressively and feeding wage inflation," DataTrek wrote. "They also create a reverse wealth effect, which should curtail consumer spending."
"Until the Fed is less hawkish and oil breaks down, we'll stay with our 10:3 ratio of defensive value and selected growth," Stifel analysts wrote.
In other news:
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2. US stock futures seesawed early Thursday, after minutes from the Federal Reserve's meeting confirmed big rate hikes are coming. Here are the latest market moves.
3. Coming up today: Ulta Beauty, Costco Wholesale Corp, and Dollar Tree, all reporting.Plus, look out for the Bureau of Economic Analysis' revised GDP data for the first quarter of 2022, publishing at 7:30 am ET.
7. Russia's central bank slashes interest rates to 11%, from 14%. It is the bank's third rate cut in just over a month, and is part of an effort to limit a rally in the ruble.
10. A lot of people are saying we're in a recession right now. Even though economic data shows we're not quite in a slump just yet, the general consensus seems to think otherwise. Google searches for "recession" in the US are climbing.
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