It’s been “risk-off” in equities this week as traders begin to factor in a rate hike from the Fed, and the high-beta biotech sector has taken the brunt of selling in the last few days. The Friday morning jobs report — 215,000 jobs were added in July — and a steadily decreasing unemployment rate lead many to believe that an incremental interest rate increase is on the way next month. Though it’s possible that the Fed may wait until their last meeting of 2015 in December, the gathering of the Open Market Committee of the Fed in mid-September is now widely expected to conclude with an increase in interest rates.
September has been the expected venue all year, and the more investors fret over this increase, and the lower the markets go, the more likely it becomes that the actual news of a hike becomes a rallying event. Investors who want or wanted to sell have had all year to do so and have another few weeks before the Fed meeting – no one’s going to be blindsided by this change. But, that doesn’t mean there’s not more downside in the short-term.
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