US Stocks Extend Rally Amid Optimism Over Fed's Monetary Policy

US stocks extend rally

US stocks extend rally

But it doesn't seem to be a concern for the US equities, as despite the morose mood in Asia and Europe yesterday, the S&P500 advanced yet to another high since April 2022, as Nasdaq 100 reached levels last since at the start of last year. The US 2-year yield which consolidates near the 4.70% level on hope that the Federal Reserve's (Fed) tightening cycle is soon over. And the 7-9% drop expected in S&P500 earnings is nothing compared to a chance that the US economy could avoid a hard landing following the Fed's steep interest rate hikes.

After all, the Fed's balance sheet only slowly drops, as the Fed's reverse repo operations tank, which means that the Fed is keeping the market liquidity in a sweet spot as the US Treasury general account is being refilled after the debt limit crisis. And all that liquidity continues to be supportive of stock prices, no matter how fast the Fed increases its interest rates.

Ipek Ozkardeskaya

Ipek Ozkardeskaya provides market analysis on FX, leading market indices, individual stocks, oil, commodities, bonds and interest rates.

She has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked in HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist in Swissquote Bank. She worked as Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020.

She is passionate about the interaction between the economy and financial markets. She has been observing and analyzing a wide variety of relationships between the economic fundamentals and market behaviour over the past decade. She has been privileged to live and to work in the world's most exciting financial hubs including Geneva, London and Shanghai.

She has a Bachelor's Degree in Economics and a Master's Degree in Financial Engineering and Risk Management from the University of Lausanne (HEC Lausanne), Switzerland.

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s&p500 federal reserve us stocks nasdaq 100 us equities stock prices US economy interest rate hikes US 2-year yield market liquidity tightening cycle S&P500 earnings Fed's balance sheet reverse repo operations

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US stocks extend rally

Ipek Ozkardeskaya

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