Traders are signaling that a pause in interest rate hikes is the most likely outcome of this week’s Federal Open Market Committee meeting of the Federal Reserve, and that comes at a time when some strategists are saying a new bull market is underway. The Dow Jones Industrial Average posted three winning sessions in a row to end last week, the NASDAQ Composite saw its sixth-consecutive positive week for the first time since November 2019, and all major indices closed above their 50-day and 200-day moving averages on Friday.”The bear market is officially over,” Bank of America equity strategist Savita Subramanian recently said, noting that the S&P 500 has risen 20% above its October 2022 low.Some question the new bull market call based on how narrow market leadership has been — a handful of the largest tech stocks responsible for much of the rebound in market indexes. But there is another important reason investors should not become overconfident. Even if the Federal Reserve decides to pause when it announces its latest FOMC decision on Wednesday, a longer-lasting shift by the Fed in its most aggressive period of monetary policy since the 1980s is by no means certain, or warranted.That’s according to former Federal Reserve vice chair Roger Ferguson.Last month, the Fed approved the tenth interest rate hike in just over a year, the swiftest monetary policy tightening that the central bank has undertaken since the 1980s, with significant repercussions not only for the stock and bond markets, but for the economy and consumers. In its May FOMC meeting statement, the Fed removed language about the need for “additional policy firming” in order to achieve inflation goals. That’s helped sustain the maj …
