The U.S. stock market is unprepared for the incoming inflation vows

The professor is presently growing concerned over the impact of the growth stocks, particularly the technology ones

The U.S. stock market is unprepared for the incoming inflation vows

Wall Street is on the verge of receiving a painful quarter ahead. One of the Wharton finance professor has been demonstrating some alarm sounds toward the market’s ability in coping with rising inflation. The country is headed toward some growing bottlenecks ahead. Inflation is anticipated to become a larger problem than what has been expected by the Fed thus far. The professor has cited some warnings that there are several risks that are tied to increasing prices. He stated that the market has to start getting prepared for a taper in the coming months.

The professor who has been bullish has grown concerned and withdrew from his bullishness in January this year. On 4th January, he stated and predicted that the Dow might hit 35,000 in 2021, which marks a 14% jump from 2021’s first market open. The index registered an all-time high index of about 35,631.19 on 16th August. On Friday, it was recorded at 34,326.46. According to professor, the biggest problem that the Wall Street may have to witness is that Federal Reserve has been stepping away from easier monetary policies too sooner than what was anticipated amid rising inflation. The country knows that a lot of the volatility of the equity market has got itself associated to the liquidity that has been provided by the Fed. If the exact same thing is taken away sooner, it means that the interest rate hikes are expected to come sooner than later. Both of these things are not showcasing any positive signs for the equity market.

The professor is presently growing concerned over the impact of the growth stocks, particularly the technology ones. He indicates that the tech-heavy Nasdaq, which has been fighting to achieve the race of just 5% to reach record high, is all set up for incoming sharp losses. The negative tilt is expected to be towards the value stocks. He states that the backdrop that has been boding well for various companies receiving benefits from growing interest rates, have all of the pricing power to deliver timely dividends. However, Yield has been scarce and encourages investors to not lock themselves into long-term government bonds which are anticipated to suffer dramatically in the next six months