Stocks May Have to Tumble 20% Before ‘Fed Put’ Comes Into Play
- Credit spreads may be more important than equity markets
- Fed likely to see pullback as immaterial to outlook: Westpac
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Anyone expecting the Federal Reserve to save the markets is likely to be disappointed unless things get a lot worse.
While yesterday’s 3.3 percent drop in the S&P 500 Index was the biggest since February, it will take a correction of at least 10 percent to get the Fed’s attention and even that probably won’t be enough to derail expected interest-rate increases, according to Krishna Guha, the head of central bank strategy at Evercore ISI.