Investors are worried about the Federal Reserve raising interest rates in January, but the markets are largely bullish on the U.S. economy, according to a new report.
The Federal Reserve on Monday raised its benchmark interest rate by a quarter of a percentage point to 0.75 percent, bringing its benchmark rate for the first time in more than five years to near zero.
The Fed’s announcement was met with mixed reviews on Wall Street, with some market participants saying the move was too small to be meaningful.
But the dollar rallied as investors expressed concern that the Fed’s decision would lead to more money being spent by the government, hurting spending and creating more debt.
“The Fed rate hike is a significant signal of a weak economy and an inflationary outlook,” said Brian Katko, chief market strategist at UBS.
“The Fed may also be signaling to the markets that they are moving away from their current fiscal stimulus policy, which may lead to a more subdued economic recovery.”
The U.K.’s Barclays and Germany’s DAX were among the most upbeat among the banks surveyed.
Barclays’ chief economist, Stephen Bullard, said the Fed was the best indicator of the economy.
“It’s the biggest indicator of inflation,” Bullard said.
“And when the Fed moves it means that there is some inflation coming in.”
The dollar rallied on Monday on the news of the Fed rate move, rising to a six-month high against the euro at $1.1627.
On Friday, the Dow Jones industrial average jumped 9,000 points to 21,926.
The S&P 500 gained 6,300 points to 2,814.
The Nasdaq gained 5,300.
The S&P 500 index has gained more than 2,500 points since it closed at its record high on June 20, 2016.
The Nasdaq has gained about 1,300 more points, while the Dow is up more than 5,000.
The dollar gained against a basket of currencies, which were higher in 2017 than they were in 2016.
