After That Drop, When Will Markets Bottom? - InvestingChannel

After That Drop, When Will Markets Bottom?

Last Wednesday, the U.S. Federal Reserve increased interest rates by 75 basis points as expected. Stock
selling continued. What did the Fed say to spook markets?

The Fed mentioned inflation and steep housing costs multiple times in its press release and question and
answer period. Optimistic as usual, markets hoped that the central bank would raise rates by less in the
next meeting. Instead, the Fed re-stated its concerns for inflation. It is willing to trigger a recession and
accommodate for job losses to slow inflationary pressures.

Only speculators would want to guess when the markets would bottom. The central bank will drive its
policy decisions on economic figures and primarily on inflation.

Investors may continue increasing their equity exposure throughout the next year. The S&P 500 (SPY)
offers exposure to the U.S. markets. Apple (AAPL), Tesla (TSLA), and Microsoft (MSFT) are among the top
holdings. Conversely, international exposure might have higher risks. The U.S. dollar is the strongest
currency globally. This weakens the attractiveness of foreign assets for investment.

Diversified firms like Proctor & Gamble (PG) and Johnson and Johnson (JNJ) are suitable for long-term
investors. They managed expenses well and navigated through the supply chain disruption in the last
year.

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