Further 20% Fall In U.S. Stocks ‘Certainly Possible,’ Says IMF Director

October 12, 2022

A shift in investor sentiment could see a further 20% downside for U.S. stock markets, according to the International Monetary Fund’s director of monetary and capital markets.

IMF research found that rising interest rates and future earnings expectations were driving down company valuations in the current market downturn, Tobias Adrian said at the 2022 Annual Meetings of the International Monetary Fund and the World Bank Group in Washington, D.C.

Sentiment and risk premia have held up “pretty well” so far, leading to an “orderly tightening,” he said Tuesday.

Asked about a recent CNBC interview with Jamie Dimon, in which the JPMorgan chief executive said the S&P 500 could easily fall by another 20%, Adrian said it was “certainly possible.”

The benchmark index has fallen by around 25% in the year-to-date.

The U.S. Federal Reserve raised its funds rate to 3%-3.25%, the highest it has been since early 2008, in September as it attempts to cool 8.3% year-on-year inflation. The latest U.S. inflation figures are due Thursday.

Source: CNBC
Image source: CNBC

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