Definitely Aug-10-2022 announced CPI numbers which says month over month All Items CPI has been unchanged, boosted the confidence in the investors.
Actually the above statement is correct.
Due to the above factor, there is high probability that FED will increase interest rate in Sep-2022 by 50 bps and it may not increase interest rates aggressively by 75 bps.
As per analysts the FED interest rate may be around 4% by March-2023 which was 2.5% as on July-2022 and which is closer to 0, around 9 months back from now.
Why we are assuming that Dow Jones will touch 32,000 prior to Jan-2023 at some point of time is?
Let us assume a company has a debt of 1 Billion USD, then that company needs to pay additional 30 million USD as interest for every 1 Billion USD debt i.e when we compare what interest they are paying in 2021 and 2023.
So there is a possibility that Dow Jones may touch at some point of time that Dow Jones will be kissing 32,000 number again. There is no guarantee that our assumption will be right. But this is what our assumptions are based upon the data.
Mainly interest burden on companies will increase.
But again there will be bull market in the end of 2023 or in the year 2024 where FED has probability to announce first interest rate cut.
At what time it will trade prior to Jan-2023 depends upon 2 factors
- Fed announcements
- Quarterly results that will be announced Oct-2022 and Jan-2023