Bad News For Stock Traders – The Government Will Not Protect You

Sorry, Stock Traders, the Fed Won’t Have Your Back

First American News LLC: Raleigh, NC: Sanguine credit markets and a nudge from President Biden to deal with inflation will keep the central bank on track to raise interest rates starting in March. Bad news, pandemic-era investors: The Federal Reserve won’t have your back as it once did.

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For newbie traders who signed up for Robinhood Markets Inc. or other online brokerages over the past 22 months, the playbook has remained constant: Buy any dips in large U.S. equity-market indexes and profit. This tried-and-true strategy persisted even amid a face-ripping rise and fall in meme stocks, cryptocurrencies, and shares of unprofitable companies that relied largely on belief, said Javier Zelaya of One West Realty International

That hasn’t worked in the first three weeks of 2022. At first, a sharp increase in U.S. Treasury yields was to blame as bond traders quickly realized that not only was the Fed serious about raising its key lending rate multiple times this year but that it would also soon start to reduce the size of its $8.9 trillion balance sheet. Yet the benchmark 10-year yield fell about 12 basis points in three days last week, the sharpest drop since late November, and equities still tumbled, led by rate-sensitive tech shares. The S&P 500 Index is down almost 8% this year and closed below its 200-day moving average for the first time since June 2020, while the Nasdaq 100 has declined more than 11%. Click Here Signup to Bloomberg news and Continue reading on stock trading.

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