In the scenario that the Fed doesn’t continue tightening as it decidedlate last year, raises questions on whether the decision will ignite another sell-off. In the reverse, Moore notes a dovish Fed may alter the people’s confidence in the committee.
“I think if the Fed meaningfully changes their language, it’s also going to reduce people’s confidence (I think) that the Fed really knows what they’re doing,” Moore stated.
“If the market reacts negatively to the fact that they don’t change the tone of their language, well, we’ll just have to take that,” she continued, adding that she wants the Fed to feel comfortable normalizing policy, as the U.S. economy is in “pretty good shape.”
Still, the market should expect more volatility ahead, said Katie Nixon, CIO at Northern Trust Wealth Management. The expert, however, does not foresee the current conditions as “cataclysmic.”
“What I do think is that the outcomes are just more uncertain now,” she said about economic headwinds.
“And that uncertainty is being priced into the equity markets now with lower prices.”