Stock Market Sees Carnage Due to U.S. Monetary Policy Shift
The Federal Reserve’s abandonment of easy-money policies has led to a fight to squash inflation, marking a dramatic shift in U.S. monetary policy. Investors have had to adapt to this new reality, with stock prices seeing significant drops since January 2022.
Notably, major U.S. equity benchmarks are yet to reach their old highs, despite better fortunes so far this year. This is a result of the Federal Reserve’s decision to raise interest rates for the first time in over three years, precipitating a market reversal.
However, the recent turnaround in the market has led to some stocks, like Nvidia, Microsoft, Eli Lilly, and others achieving new record highs. But others have not been so fortunate.
Among the companies struggling to return to their 2021 record highs are Amazon, Salesforce, Danaher, Disney, Emerson Electric, Alphabet, and Honeywell International. Let’s look at what each of these companies needs to achieve to reach new all-time highs.
Amazon has made progress in recouping its bear-market losses, with a focus on boosting margins on the retail side of its business and enhancing its cloud-computing division, Amazon Web Services.
Similarly, Salesforce needs to maintain its improved profitability and demonstrate that its artificial intelligence investments are delivering financial benefits. Much would also depend on an improvement in the overall business climate.
Danaher, on the other hand, would likely need multiple years of sustainable growth and sustained sales in its bioprocessing division to return to its 2021 peak.
For Disney, their success would be dependent on CEO Bob Iger’s turnaround efforts as the company navigates operational challenges with its streaming division.
Overall, all of these companies face unique challenges and hurdles to reach the heights they achieved before the Fed’s policy shift. As the market continues to be volatile and unpredictable, only time will tell how these companies will navigate these challenges and achieve new highs.
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