Overnight, the Federal Reserve sharply raised interest rates by 75 basis points, the US stock market rose, but Goldman Sachs believes that the rebound has entered the end, the US stock market will continue to bottom.
As markets expected, the Fed raised interest rates the most aggressively since 1994 to curb high inflation and strongly pledged to bring it down, although Mr Powell also said a single 75 basis point increase was too big to become routine policy.
U.S. stocks rebounded strongly after the announcement of the decision, and collectively closed higher, with the S&P 500 up 1.46%, the Dow up 1%, and the NASDAQ up 2.5%.
Goldman’s sales and trading department observed that some ‘low-quality’ assets outperformed the market that day, including nonprofit technology stocks, highly valued software stocks and the most shorted stocks.
However, Goldman Sachs trader John Flood pointed out that the market will continue to bottom after the post-FOMC retreat, with COMMODITY trading advisers (CTAs) being the main sellers, corporate buybacks stalled, and retail investors still trapped in the headwinds of the crypto collapse.
Daan Struyven, global economist at Goldman Sachs, also said the Fed’s statement was troubling. “The primary target is inflation,” he said.
But Goldman sachs sees some “respite” for stocks at the end of the month, mainly due to heavy end-of-quarter pension allocation requirements.
As of Wednesday’s close, Goldman’s model predicts $30 billion of net buying at the end of the month and quarter, the 94th largest in the past three years and the 96th largest since January 2000, a significant amount.