Why good news is bad news on Wall Street
So why is good news taken as bad news on Wall Street? “The short answer is that as the economy continues to grow, particularly on the jobs front, that puts more pressure on the Federal Reserve to increase interest rates,” explains John Leer, chief economist at Morning Consult. Strong economic reports mean the Federal Reserve’s historic rate hikes may not be having the effect that they should, and Jerome Powell & Co. may need to raise rates for longer to slow the economy and cool inflation.
That may not sound like great news to you or me, but Wall Street took that reading as a sign the Fed’s medicine may be beginning to work. “One of the things that we’ve seen is that wage growth has been fairly strong and there’s the fear that wage growth is going to ultimately drive inflation higher,” Leer told me on CNN’s Early Start.
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