It looks like the U.S. Federal Reserve decided to play the part of the Grinch today, pouring cold water on the Street’s ongoing holiday rally with a very hawkish update. And we’ve got one word to describe the day’s price action – ouch!
In short, while the Fed did cut interest rates today, its December update also spooked the markets, stoking bearish sentiment among investors. That’s because the central bank signaled that it doesn’t want to cut rates too many more times because inflation is becoming a concern once again.
This diversion from the market’s expectations has led investors to sell stocks in droves. But we think this reaction is quite overdone.
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