The Federal Reserve is planning on moving up interest rates another 75 bps to 5.25 percent at the end of 2023. Historically, Federal Reserve interest rate hikes have held stocks down, although the December 2015 to December 2018 series of rate hikes to 2.5% did not, perhaps because stocks had been held down for so long after the stock market bubble collapse in 2000. Corporate tax rates were dropped from 35 to 21 percent as part of the Tax Cuts and Jobs Act in December 2017 as well which may have boosted share prices despite Fed tightening.
Stocks were down as much as 24.5% in the first half of 2022, bounced for a time, but started falling again propelled by hawkish Fed speakers and a few bad consumer inflation reports. Down 19.4% from the highs in 2022 on the final day, Friday, December 30.
Stock market trend:
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