GDP Report Concerns Investors

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Investors are gearing up for rate hikes.

The United States economy continues to remain in a state of uncertainty as the threat of recession looms. Obviously, that threat has investors worried, but in addition to the potential of recession, investors are closely watching the moves of the Federal Reserve. Following last week’s report on the current state of the US GDP, investors believe that a rate hike is imminent, possibly as soon as this week.

“Investors likely believe Thursday’s GDP report will show a second quarter of decline, which is the unofficial signal of recession,” Sam Stovall, chief investment strategist at CFRA Research, told CNBC. “While the Fed will probably announce a 75-basis-point rate hike on Wednesday, they will offer a more moderate tone towards further rate increases. We see this counter-trend rally continuing in the near term.”

Despite concerns, investors are attempting to remain optimistic about a potential upturn in corporate earnings. Despite general falls across all of the major stock indexes, they are actually doing fairly well this month.

“Equities have managed to stage a rally MTD, and climb a wall of worry. The bounce has been led by cyclical and Growth stocks, helped by longer end yields stabilizing, which in turn eases the pressure on P/E’s,” Barclays’ Emmanuel Cau wrote in a note to investors.

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