Thursday, 1 February 2018

Stocks shrug off Fed inflation expectations as Greenspan sees market bubbles

The US stock market rose on Wednesday, the S&P 500 rising 0.1 percent.

US stocks briefly went negative after the Federal Reserve left interest rates unchanged at its meeting but said it expected inflation to move “up this year and to stabilize” around its 2 percent target.

The subsequent stock market recovery left the S&P 500 with a gain of 5.6 percent for January, its best monthly performance since March 2016.

A former Fed chairman, though, is not particularly sanguine about markets.

Alan Greenspan told Bloomberg on Wednesday that bubbles have emerged. “There are two bubbles: We have a stock market bubble, and we have a bond market bubble,” he said.

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