Bank of America Says Stock Market Threatened With 'No Landing' ScenarioTop economist cautions that Fed belt-tightening could potentially negatively affect the stock market.
BySteve Huff•
Bank of America's Chief Economist, Michael Hartnett, predicts a "no landing" scenario for the year's first half.
According to aFox Business report,this means Hartnett sees no economic slowdown, and inflation remains above trend. However, Hartnett's prediction also warns that raising interest rates could lead to a "hard landing" outcome in the latter part of 2023. He added that central bank tightening "always breaks something" and projected that the S&P 500 could tumble nearly 7% by early March.
The year2022was the worst for all three indexes since the 2008 financial crisis, with the Dow Jones Industrial Average down 8.8%, the S&P 500 sinking 19.4%, and the tech-heavy Nasdaq composite plummeting 33.1%. In addition to Hartnett's prediction, a BofA global fund manager survey shows that most investors are skeptical about the current stock rally, with 66% of respondents expecting stocks to return to new lows.
Eight times in a row, theFederal Reservehas already raised interest rates from 4.5% to 4.75%. However, economic data reports — including a disappointing inflation report pointing to high consumer prices — indicate that the Fed's campaign to crush inflation is "very much unaccomplished," according to Hartnett.
