Will the Fed's hawkish stance impact the US stock market? DataTrek: "Higher for longer" is no longer a threat to the rise of US stocks.

DataTrek analysts Nicholas and Jessica Rabe posted on X platform, stating that the "Higher for longer" policy poses no further threat to the continued rise of the US stock market. It is understood that the latest Federal Reserve dot plot shows that the rate cut in 2025 will be smaller, easing market concerns that the Fed will adopt the "Higher for longer" policy. Some analysts believe that US stocks may face some pullback and volatility, depending on whether US bond yields continue to rise. Data shows that the US two-year Treasury yield has remained stable at high levels for about two years, hovering between 3.5% and 5%, currently at 4.36%, up 2.56% so far this year. The DataTrek analysts pointed out that this is the most sensitive part of the yield curve for the market's view on the Fed's future policy. However, the S&P 500 index has risen by 50% during this period. This means that "Higher for longer" will not pose a threat to further gains in the US stock market. In 2022, the two-year US Treasury bond rose by 363 basis points to 4.41%, while the S&P 500 index fell by 18.4%, the MSCI Europe index fell by 18.3%, the MSCI Japan index fell by 18.7%, and the emerging markets index fell by 22.4%. In 2023, the two-year US Treasury bond fell by 18 basis points to 4.23%, while the S&P 500 index rose by 24.2%, the MSCI Europe index rose by 15.8%, the MSCI Japan index rose by 17.8%, and the emerging markets index rose by 6.1%. From 2024 to present, the two-year US Treasury bond rose by 9 basis points to 4.32%, while the S&P 500 index rose by 24.4%, the MSCI Europe index fell by 2.1%, the MSCI Japan index rose by 3.2%, and the emerging markets index rose by 5.1%.