A Santa Claus Rally is in doubt after the U.S. Federal Reserve decided to raise interest rates and economic recession looms.
In an interview with FOX Business, Edward Moya, a senior market analyst at OANDA in New York said, "This year, as economic reports improved in October and November, the U.S. Federal Reserve decided to maintain its hawkish interest rate strategy and moved them up another 50-basis-points, highlighting the 40-year inflationary highs and the likelihood of a recession."
Coined by Yale Hirsch, the creator of the Stock Trader’s Almanac, in 1972, the Santa Claus Rally stems from momentum created by bullish seasonality and in sectors where traders are placing bets for the new year. As stocks rallied ahead of the Fed's December meeting, "We believed it would become a ‘buy the rumor, sell the news’ type event and that is exactly what happened," Adam Kobeissi, founder of the financial newsletter, The Kobeissi Letter" told FOX Business on Monday."The Fed reiterated they expect higher rates until there is a clear path down to 2% inflation and unemployment begins to rise, neither of which we have seen yet," he continued.
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