Friday’s booming rally turned into Monday’s reality check as investors weighed just how aggressive the Federal Reserve will be on lowering interest rates and how the moves might impact the broader business and economic climate.
Chair Jerome Powell, in his annual address at the Jackson Hole, Wyoming, symposium, gave Wall Street hope of easier days ahead when he said conditions “may warrant adjusting our policy stance,” which is generally seen as “Fedspeak” for cutting rates.
Stocks soared while Treasury yields plummeted on the news as the knee-jerk reaction took hold for a rate reduction when the Federal Open Market Committee issues its next decision on Sept. 17.
However, cheer turned to caution Monday as market experts weighed what happens next, even if a move next month is baked in. Stocks were mostly lower and shorter-maturing Treasury yields, which are more sensitive to Fed action, moved higher.
“I’m on the slower side more than the faster side if the Fed, does go,” said Jason Granet, chief investment officer at BNY. “He definitely moved the door ajar, as opposed to kicked it wide open for September.”
