Investment Strategies: From Wall Street to Main Street Hingham MA

Craig Hartnett of Hingham MA assesses why the stock market has declined since the Federal Open Market Committee (“FOMC”) did not raise policy interest rates at it’s 2 day meeting that concluded on September 17th.

The FOMC had made statements preceding the September meeting indicating their desire to undertake the 1st policy interest rate increase in 9 years given the later stage of the recovery in the U.S. economy. With the FOMC’s stated desire to increase interest rate, there would need to be serious concerns with the developments in the global economy in order for policy interest rates not to be increased.

The FOMC’s included these comments in their released statement that concluded the meeting:

“Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term.”

“Committee continues to see the risks to the outlook for economic activity and the labor market as nearly balanced but is monitoring developments abroad”.

Increases in policy interest rates are not positive for the U.S. economy in terms of future growth and employment gains or the equity markets though there is a lagged negative effect.

Even though policy rates were not increased, the stock market has declined because the negative issues the FOMC communicated as the reasons for not raising interest rates have caused growth concerns for the U.S. economy and therefore U.S. corporate profits which is being reflected in lower equity market values.

This is meant to provide perspectives on three investment strategies and not a recommendation from Craig Hartnett to investors in Hingham MA and the South Shore community.