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Market optimism in gloomy times

General gloom about the prospects of the markets and economy has set in among Americans with high inflation and talk of a looming recession on the horizon. However, there may be light at the end of the tunnel with the worst of the selloff within sight. At least that is what Mark Zandi, chief economist of Moody’s Analytics, opines.

Why is he optimistic? Although the stock market has lost 20 percent of its value plunging it into bear market territory and it is unlikely that the return will come with double-digit gains, he says that modest mid-single digits seem likely. The drop in market value was driven by investors anticipating higher interest rates to combat inflation, but now those rate hikes have been internalized.

There will still be market volatility with stocks going up and down, but should the Federal Reserve “simply raise interest rates as expected, and the economy is able to avoid an outright downturn, stock investors will stop selling, and the bear market will end.”