Bank of America Says Stock Market Threatened With 'No Landing' Scenario Top economist cautions that Fed belt-tightening could potentially negatively affect the stock market.
By Steve Huff
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Bank of America's Chief Economist, Michael Hartnett, predicts a "no landing" scenario for the year's first half.
According to a Fox Business report, this means Hartnett sees no economic slowdown, and inflation remains above trend. However, Hartnett's prediction also warns that raising interest rates could lead to a "hard landing" outcome in the latter part of 2023. He added that central bank tightening "always breaks something" and projected that the S&P 500 could tumble nearly 7% by early March.
The year 2022 was the worst for all three indexes since the 2008 financial crisis, with the Dow Jones Industrial Average down 8.8%, the S&P 500 sinking 19.4%, and the tech-heavy Nasdaq composite plummeting 33.1%. In addition to Hartnett's prediction, a BofA global fund manager survey shows that most investors are skeptical about the current stock rally, with 66% of respondents expecting stocks to return to new lows.
Eight times in a row, the Federal Reserve has already raised interest rates from 4.5% to 4.75%. However, economic data reports — including a disappointing inflation report pointing to high consumer prices — indicate that the Fed's campaign to crush inflation is "very much unaccomplished," according to Hartnett.
