Pro: ‘three more years of a bull market is possible’

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on Mar 17, 2022
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  • Fed Chair Jerome Powell announced a 25 basis points increase in interest rate.
  • LPL Financial's Ryan Detrick says SPX tends to do well after the first rate hike.
  • He sees the economy as strong enough to withstand inflation and Ukraine war.

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The U.S. stocks remain volatile on Thursday after the Fed Chair Jerome Powell announced a 25 basis points increase in interest rate in response to inflation that climbed to 7.9% in February.

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LPL’s Detrick: the bull market is not over yet

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While many are discussing odds of inflation following the FOMC meeting, LPL Financial’s Ryan Detrick says the historical data suggests otherwise. On CNBC’s “Worldwide Exchange”, he said:

Historically, after the first hike the last six times, going back six cycles, so a long time, couple decades; one year later, stocks were up every single time. Were they up a ton? No. But they were higher. There were 17 rate hikes in 2004, 2005, and 2006, SPX was up every single year.

The U.S. central bank on Wednesday indicated six consecutive rate hikes ahead.

Economy can withstand the macroeconomic headwinds

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Detrick agreed that the double whammy of record inflation and the ongoing war in Ukraine made things more challenging this time, but said:

The economy is pretty strong. It will be able to withstand this. History tells us when you have a rate hike, you’re more mid-cycle. We found after that first hike, SPX has its ultimate peak nearly 3.5 years later. So, who’s to say you have three more years of a bull market. It’s possible.

The LPL Financial chief market strategist also recalled that the market recovered from losses in just a month after the Cuban Missile Crisis.

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