At 2:00 PM Eastern Time on Wednesday (February 1st), the Federal Reserve raised the benchmark interest rate by 25 basis points to a range of 4.50%-4.75%, in line with market expectations, marking the second consecutive slowdown in the pace of rate hikes. This is the eighth consecutive rate hike by the Federal Reserve since it began this cycle of rate increases in March last year, with a cumulative increase of 450 basis points.

The Federal Reserve initiated this cycle with a 25 basis point rate hike on March 17, 2022, followed by a 50 basis point increase on May 5th of the same year. After four consecutive aggressive hikes of 75 basis points each, the Federal Open Market Committee (FOMC) slowed the pace of rate hikes in December 2022, reducing the single hike amount from 75 basis points to 50 basis points. The timeline of the rate hike curve points: 25 basis points - 50 basis points - four consecutive 75 basis points - 50 basis points - 25 basis points - ...

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Although the FOMC statement said: "The Committee expects that ongoing increases in the target range will be appropriate to achieve a sufficiently restrictive stance of monetary policy." Federal Reserve Chairman Powell spoke with a slightly hawkish tone at the press conference after the meeting, stating that the Federal Reserve is firmly committed to achieving the 2% inflation target. The full impact of the rate hikes has yet to be realized. Federal Reserve officials still have more work to do. Price stability is the foundation of the economy. Powell believes that the Federal Reserve continues to anticipate ongoing rate hikes to achieve a sufficiently restrictive stance. He emphasized that inflation is far above the target. History warns against easing policy too early. This statement is considered the essence of the Federal Reserve Chairman's speech and is seen as slightly hawkish. It also led to a less than expected reaction in the stock market on Wednesday (February 1st), especially with the Dow Jones Industrial Average only rising by 0.02%, essentially flat.

Essentially, the most important basis for any country's central bank's monetary policy decisions is the core economic data of the country itself, especially the inflation rate. Whether the Federal Reserve will continue to raise rates in the future, and by how much, is also the case. Personally, I predict that the Federal Reserve will raise rates by another 0.25 percentage points at the Open Market Committee monetary meeting on March 21st-22nd. After that, if the inflation rate continues to fall, the Federal Reserve may stop raising rates. And I expect that the prices in the global developed economies, including the United States, will continue to fall, which is a high probability event. In other words, although the Federal Reserve is "talking tough," the tightening of monetary policy entering its end stage is an inevitable trend!

Another major positive for the U.S. stock market and the global stock market is the recent significant rebound of technology stocks in the Nasdaq Composite Index. I have always emphasized that since the global financial crisis in 2008, technology stocks have been the main driving force of a bull market that has lasted for more than a decade. Technology stocks are the anchor and mainstay of the U.S. stock market, playing the role of the hero saving the beauty time and time again. Behind this is the endless innovative power of American technology companies, like an eternal motion machine. This time, technology stocks have once again helped the U.S. stock market out of a difficult situation. Moreover, on Wednesday, under the slightly hawkish attitude of the Federal Reserve, the Nasdaq Composite Index rose by as much as 2.00%, up 231.77 points, while the Dow was flat and the S&P rose by 1.05%.

The Federal Reserve's slowdown in rate hikes has become a fact, and the expectation of stopping rate hikes is rapidly increasing. In addition, U.S. technology stocks have already fully started. There is also the fact that U.S. companies that are currently releasing earnings reports are much better than originally expected. Moreover, the global economic supply chain is recovering, especially with the retaliatory rebound of Chinese demand, and it should be no doubt that the global economy will quickly regain its vitality in the future. The International Monetary Fund (IMF), which is the most sensitive, has recently raised its forecast for global economic growth this year.

The economic fundamentals determine the stock market fundamentals! It may be just around the corner for the global stock market to experience a significant rally. What should investors do? Prepare enough "ammunition," seize the rare opportunity, wait for the right moment, and strive for more gains!