US Stock Market Sees Double-Digit Gains After Past Inflation Peak

[Asia Economy Reporter Changhwan Lee] There is a claim that the U.S. stock market recorded double-digit gains in the past after the inflation rate peaked.

According to Bloomberg News on the 10th (local time), Jim Paulson, Chief Investment Strategist at Russell Group, stated that since 1950, after 13 major inflation peaks, the Standard & Poor's (S&P) 500 index recorded an average increase of 13% over the following 12 months.

Among these, in 10 cases, the S&P 500 index surged an average of 22% in the year following the inflation peak.

Strategas Research Partners also analyzed that since consumer price inflation exceeded 5% after World War II, the S&P 500 index rose by 5%, 12%, and 15% over 6 months, 1 year, and 2 years respectively.

However, Bloomberg emphasized that for the stock market to rise significantly as before, inflation must first fall rapidly.

Moreover, with the prevailing forecast that the terminal benchmark interest rate will reach 4.8% in the first half of next year, it is assessed that the Federal Reserve (Fed) still has considerable room for further rate hikes.

Mary Daly, President of the San Francisco Federal Reserve Bank, also referred to the October CPI, which fell short of market expectations, as "really good news," but stressed, "While it is better than exceeding 8%, it is by no means close enough to the Fed's target of 2% to be reassuring."

Lorie Logan, President of the Dallas Federal Reserve Bank, said, "I believe it may soon be appropriate to slow the pace of rate hikes," but warned, "However, a slowdown in the pace of hikes does not mean (monetary) easing policy."