Shares of industrial and transportation companies rose as hopes for mild inflation data built.
Cyclical stocks such as industrials slid in late 2022 on fears that surprisingly "sticky" inflation data would trigger more aggressive rate hikes. One money manager said a major risk to markets in 2023 is an overcorrection on policy from the Federal Reserve and Congress.
The central bank was too quick to cut interest rates and the U.S. too quick to dole out cash in 2020, and, recognizing that, both could be too slow to react in 2023, said Lorenzo Di Mattia, manager of hedge fund Sibilla Global Fund.
"They overstimulated, both fiscally and monetarily," said Mr. Di Mattia. "In 2008 and in 2020, the fear was the 1930s -- a deflationary slowdown. Now, the fear is the 1970s. There's a lot of talk about [former Fed Chairman] Volcker and the 70s. But the 70s probably aren't going to happen ... I think the Fed will be reluctant to cut early in the recession, and, with a divided Congress, there will be no fiscal stimulus," he said.
Write to Rob Curran at rob.curran@dowjones.com
(END) Dow Jones Newswires
01-10-23 1732ET
