Institutional Alert: S&P 500 Average Plunge of 16% After Fed Chair Change
BlockBeats News, February 3rd. Barclays pointed out that since 1930, in the six months following the appointment of a new Federal Reserve chairman, the S&P 500 index has experienced an average drawdown of about 16%, significantly higher than the normal pullback level. If Kevin Warsh takes office in May, US stocks may come under pressure again.
The report stated that a new chairman's tenure often faces a market "test" in the months following inauguration. After Trump nominated Warsh to replace Powell, US stocks declined, as the market viewed him as a less dovish choice.
Analysis believes that amid Federal Reserve independence disputes, high inflation, and simultaneous job slowdown, leadership changes will exacerbate monetary policy uncertainty. If Warsh pushes for balance sheet reduction, it may further drain liquidity, bearish risk assets; however, his asset-hawkish balance sheet stance may help suppress the gold price and temporarily support the US dollar.
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