Markets Tumble as Fed Rate Hikes Weigh on Stocks, Bonds, and Economic Outlook
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Stocks and bonds have both fallen due to the Fed's interest rate hikes meant to curb inflation. This is an unusual situation that has disrupted markets.
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High inflation and a strong job market mean the Fed will likely keep rates high for longer than expected. This will keep borrowing costs high for consumers, businesses, and government.
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High borrowing costs reduce risk appetite and spending. The housing market has already slowed dramatically due to higher mortgage rates.
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Corporate profits are under pressure from high rates, threatening the recovery investors had hoped for.
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Investors can choose to do nothing, move into cash equivalents like CDs and savings accounts, dollar-cost average into stocks/ETFs, buy short-term bonds, or re-evaluate their options.
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