Part 4/9:
The market's initial reaction centered on the language used in the Fed’s statement. Notably, the phrase about “taking into account the cumulative tightening of monetary policy” was seen as a bullish signal initially. Still, the overall outcome was a swift reversal, with the S&P 500 falling roughly 2.5% and the NASDAQ experiencing an even more pronounced decline.
Meet Kevin, a well-known financial analyst, summarized the situation by suggesting that the Fed’s aggressive tightening stance—intent on over-tightening to prevent runaway inflation—may have backfired in the short term. The fear is that such policy moves could slow economic growth, make borrowing more expensive, and hamper consumer spending, especially on high-cost items like cars.