Fed rate and inflation: American investors called the main threat to the stock market

Ставка ФРС и инфляция: американские инвесторы назвали главную угрозу для рынка акций

At the end of March, CNBC polled about 400 professional managers. Most consider politics FED the main threat to the stock and does not expect the growth of S&P 500 at the end of the year.

The main risk for the stock market

Almost half of the respondents, or 46%, considers, that a bullish trend in the stock market could interrupt the Fed's rate hike. Exactly a third of respondents named high inflation as the main risk.

16 March, the Fed raised interest rates on 25 basis points. The regulator plans to raise the rate by this amount at each of the six remaining meetings in 2022.

“Inflation remains high due to an imbalance in supply and demand, as well as energy prices. The consequences of the conflict in Ukraine are still uncertain, but in the near future these events, probably, increase inflation and reduce economic activity", — then the Fed explained its decision.

Later, central bank governor Jerome Powell said, that in the fight against inflation, the rate can be raised more aggressively. Many investors doubt, that the Fed will be able to stop the rise in prices and not cause a recession.

So, famed activist investor Carl Icahn recently said, what awaits a "hard landing". In his opinion, inflation and geopolitical tensions could lead to a recession: "The last few years I've been hedging everything. We have strong protection for long positions, and we try to be active. Inflation is a terrible thing, when it accelerates".

Jeffrey Gundlach, who is called the king of bonds, also criticized the Fed's fight against rising prices. According to the investor, Fed's long-term 2% inflation target is 'ridiculous'. He expects, that the inflation rate by the end of 2022 will be 7,5%, and before that reaches 10%. In February, US prices rose by 7,9% - maximum since 1982.

The main threat to the markets

Fed error 46%
Rising prices in the US 33%
The situation in Ukraine 11%
Relations with China 6%
New wave of COVID-19 4%


S&P 500 by the end of 2022

Most of the respondents, or 58%, considers, that the index S&P 500 by the end of 2022 will remain at the current level - about 4600 points. Approximately every third respondent expects growth to 5000 and above. Correction up to 4000 and below is only seen 6% investors.

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Index S&P 500 at the end of the year

At the current level 58%
Above 5000 points 36%
Below 4000 points 6%


What stocks to look out for

To the question "What would you buy now?» 30% respondents answered: "High Dividend Stocks". Probably, they chose these shares due to the fact, that dividends allow you to receive a relatively stable income even during periods of market downturn.

Approximately one in four named bank shares, because they benefit from rising interest rates. Large and small technology stocks have chosen 21 And 13% respondents.

Which shares to buy

With high dividends 30%
From the financial sector 26%
Large technology companies 21%
Small technology companies 13%
From the agricultural sector 4%
ESG funds 4%
From the consumer goods sector 2%


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