Karine Jean-Pierre, White House press secretary, said Wednesday that the stock market, which continues to witness erratic trading amid soaring inflation, is not something that the White House tends to keep an eye on every day. Asked about the stock market's performance amid rising interest rates from the Federal Reserve and the potential for gains that have defined President Biden's presidency as being erased, Jean-Pierre said nothing has changed on how the White House views the stock market's behavior.
Jean-Pierre told reporters that nothing has changed on how we see the stock market. That's not something we keep an eye on every day, so I'm not going to comment on that from here. The former White House press secretary Jen Psaki said that Biden does not look at the stock market as a means to judge the economy. More retailers revealed the negative impact of the worst day for stocks since 2020, which saw a steep selling Wednesday.
Target shares fell after it was revealed that rising costs will hurt profitability for the rest of the year. This follows Walmart's lower-than-expected profit report on Tuesday, which was also blamed for inflation. Chair Jerome Powell said at the Wall Street Journal that the Fed will have to move more aggressively if inflation that is running at a four-decade high doesn't go well after earlier rate hikes.
In a recent analysis, Goldman Sachs lowered its year-end price projection for the S&P for the third consecutive time to 4,300, which is a potential 8% upside to current levels, though down 10% from the start of the year. Goldman initially predicted that the S&P would close out the year at 5,100.
The outlook is much bleaker if the economy is dragged into a recession this year: Goldman projected that the S&P would fall close to 11% from the benchmark's current level, ending the year around 3,600. That would mark a decline of 25% from the beginning of the year.
The index has plunged in recent weeks due to concerns over rising interest rates and a darker outlook on the market.
Since the beginning of the year, the benchmark S&P has dropped more than 16%, near bear territory. The last time the S&P entered a bear market was in March 2020 at the beginning of the COVID-19 epidemic.
There are growing fears that the Fed will cause a recession. Hiking interest rates can lead to higher rates on consumer and business loans, which slows the economy by forcing employers to cut back spending. Wall Street firms are forecasting a downturn in the next two years, as well as Fannie Mae and Deutsche Bank.