US stock indices ended the past week with a fairly strong decline. Earlier, experts have repeatedly stated that the US stock market is "overheated" and predicted a serious collapse. We also recall that the main reason for the growth of the US stock market is the monetary policy of the Fed, according to which the US economy receives $ 120 billion every month. And despite all the rumors related to the completion of this program in the coming year, so far, the regulator has not made any specific decisions, and Jerome Powell continues to remain calm and silent on this issue. Meanwhile, the mood on the stock market began to deteriorate. First, in August, the market felt the deterioration of the economic situation in the United States. Nonfarm Payrolls were weak. The number of cases of infection with the "coronavirus" continues to grow, despite the ongoing vaccination. Second, the situation may continue to worsen in the future, as the cold season comes, during which the number of diseases traditionally increases. Third, stock indices have already grown very much, and it may be time to adjust. One way or another, the prospects of the US stock market continue to depend entirely on the actions of the Fed. Already on September 21-22, the Federal Reserve will hold a regular meeting, following which the markets will wait for specifics regarding the QE program and the timing of its curtailment. Recall that the markets were waiting for these specifics from Powell back in Jackson Hole and then hoped for a "Beige book." However, they did not wait. Therefore, now all the attention of the markets is on the Fed meeting.
Given that the situation has recently worsened slightly, many experts believe that the Fed will not announce the curtailment of QE in September but will wait until November or December. Although, for example, James Bullard believes that the conditions for reducing QE have already been created, the labor market is recovering by an average of 500 thousand per month, and inflation has reached medium-term goals. Thus, it no longer makes sense to maintain the current volume of stimulus.
At the same time, Stephen Major, an expert on stock and currency markets, believes that the Fed may further stretch its plans to curtail stimulus. He said that 2023 might be too early to raise the rate. Major also draws attention to the weak Nonfarm report in August, believing that this will delay the transition to curtailing QE in September. Thus, the main intrigue, which consists of when the Fed will begin to reduce the volume of monetary injections into the economy, has not gone away. And if Major is right, then the US stock indices may resume growth, as this will mean that money will continue to flow to the markets in the same volumes for some time.