The Stock Market Needs to Stop Worrying About the Fed and Think About This Instead

The stock market is fixated on interest rates and inflation, hoping a decline in the latter will bring a fall in the former. The problem is that this would mean lower profits than currently expected.

Though it has been rallying this week, the S&P 500 remains about 18% below its January 2022 record high. The main factor is that high inflation has prompted the Federal Reserve to lift interest rates in order to reduce demand for goods and services and keep prices from rising even more. An end to rate increases would allow investors to look ahead to the end of the economic damage they bring.