Dovish Fed but one of the strongest performance from S&P this month is quite contradictory to me, is there a reason why this is happening? - Seedly
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Anonymous

Asked on 13 Apr 2019

Dovish Fed but one of the strongest performance from S&P this month is quite contradictory to me, is there a reason why this is happening?

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Yeo Enk Loui
Yeo Enk Loui
Level 6. Master
Answered on 15 Apr 2019

Hi there,

In fact, a Dovish Fed may be good for the stock market as that basically means that they will not take aggressive acions (such as decrease money supply to rein in inflation). This is usually accompanied by lower interest rates encouraging more corporate borrowing, which in turn leads to greater profits and a robust economy. Businesses will enjoy the ability to finance operations, acquisitions and expansions at a cheaper rate, thereby increasing their future earnings potential, which, in turn, leads to higher stock prices.

Hope that helps!

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