06/16/2022
{Fed’s June Rate Hike}
Wall Street was initially cheered by the 0.75% rate hike announced by the Federal Reserve on Wednesday — a drastic step to rein in soaring prices — but the euphoria may be short-lived. As the implications of the decision sink in, many investors remain worried about the potential for a recession.
Their biggest concern? The central bank is hoping to tamp down inflation currently running at 40-year highs by making it more expensive to borrow money, which could put a drag on consumer and commercial economic activity. Keith Buchanan, senior portfolio manager at Global Investments in Atlanta, says that in addition to raising rates, the Fed “also indicated that they see a slower economy going forward.”
Those conjoined expectations — reduced growth combined with higher rates — are rattling traders and novice investors alike.
While investors today have myriad opportunities to enter the market at a lower cost than ever thanks to innovations like fractional shares and the rise of commission-free trades, this also means that many people are plunging straight into the deep end of the pool. Now that the market is trending down, many investors, especially younger ones, find themselves in uncharted territory.
