The key US stock market indices - Dow Jones, NASDAQ, and S&P 500 - ended Thursday with a new small increase. In principle, this growth does not mean practically anything, since the global downward correction persists, and within its framework, from time to time, upward corrections occur, one of which we are witnessing now. However, forecasts for the American economy are getting worse from month to month. Yesterday, we witnessed far from the strongest business activity indices. For example, in the manufacturing sector, the indicator fell to 52.4, and in the service sector – to 51.6. GDP in the first quarter was negative. And the fact that the Fed will continue to raise rates and reduce the money supply only means that the economy will cool down in the coming quarters and years. Thus, many experts are already sounding the alarm. They estimate the probability of a recession next year at 30%. The probability of a recession in the next two years is 48%. Experts note that everything will depend on inflation and how quickly the Fed will be able to return it to the target level. And the solution to this problem will depend on how much energy prices will rise. As we can see, the factors that affect inflation, GDP, and experts' expectations remain the same. Accordingly, the fundamental background does not change at all.

Also yesterday, Jerome Powell, in a speech before the Financial Services Committee in Congress, noted that there is a possibility of a recession, but the regulator sets itself the main goal – price stability. This suggests that the Fed decided to sacrifice economic growth. From our point of view, the situation after this assumption became clearer than clear. Now it is absolutely clear that even if GDP starts to slow down (and then decline) at a higher rate than currently expected, this will not stop the regulator in its actions to ensure acceptable inflation. Thus, the US stock market, after a slight upward correction, is likely to resume its decline. There are simply no other options right now. Naturally, indices and stocks cannot fall constantly and continuously, since in this case, they will be at zero in a couple of months, which in principle cannot be. Therefore, we will see a prolonged fall stretched over time as long as the Fed raises the rate. The only possible option is that the market will begin to recover when the Fed starts hinting at the imminent end of the rate hike cycle. But to do this, the rate must first rise to at least 3%, which will have to wait at least until the end of the year.