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Mike Whitney – The Fed’s Role in the Stock Market Slide

When the Dow Jones Industrial Average (DJIA) and S&P peaked in May 2015, investors were still confident that the Fed “had their back” and that any steep or prolonged downturn in stocks would be met with additional liquidity and a firm commitment to maintain zero rates as long as necessary.  But now that the Fed has started its long-awaited rate-hike cycle, investors aren’t sure what to expect.

This growing uncertainty coupled with flagging earnings reports have factored heavily in Wall Street’s recent selloff. Unless the Fed is able to restore confidence by promising to take steps that support the markets,  stocks are going to continue get hammered by economic data that’s bound to deteriorate as 2016 drags on.

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