Consumer spending pressures may finally be forcing the Federal Reserve to rethink its aggressive interest rate hiking stance, according to Tom Lee, head of research at Fundstrat Global Advisors. Lee pointed to Starbucks’ disappointing same-store sales as evidence of consumers tightening their spending due to rising costs in other areas, such as auto and homeowners’ insurance. These pressures, combined with Fed Chair Jerome Powell’s comments expressing preparedness to respond to labor market weakness, suggest a possible shift in the central bank’s policy stance. Lee believes there is a good chance that interest rates have already reached their peak. If inflation improves in the coming months, as expected, he anticipates a positive outlook for stocks, especially small-cap stocks and those in the technology sector that are benefiting from artificial intelligence tailwinds.
Fed’s Hawkish Stance May Yield as Consumer Spending Pressures Mount
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