Markets mixed as Fed could still “create quite a significant liquidity squeeze”

Markets were mixed on Thursday.

The S&P 500 fell 0.2 percent but the STOXX Europe 600 rose 0.2 percent and the Nikkei 225 rose 0.4 percent.

Regarding the fall in US stocks, Ryan Nauman, market strategist with Informa Financial Intelligence, said that investors could have re-evaluated just how dovish Federal Reserve chairman Jerome Powell is, noting that the “Fed could raise rates three times next year and still be within” its estimated range of a neutral rate.

David Rosenberg, Gluskin Sheff chief economist, is even more wary of the Fed, noting that its balance sheet reduction alone could have drastic implications for stocks.

“The Fed doesn't really have to do anything on rates,” he said. “Just the balance sheet alone is going to create quite a significant liquidity squeeze next year.”