Earlier this month, minutes of the Fed's December meeting revealed that the central bank was considering reducing its bond holdings by not replacing bonds that mature — a more aggressive step than just ending the purchases. Analysts now forecast that the Fed could begin shrinking its holding as early as July, much sooner than was expected even a few months ago.
Those worries have sent stock prices fluctuating wildly. The Dow Jones average plunged more than 1,000 points during Monday's trading session before recovering and finishing with a modest gain. On Tuesday, the S&P 500 closed down 1.2%. Steady declines since the start of the year have left the S&P down nearly 10% — the level that investors define as a “correction.”
“There is a fair bit of uncertainty about what to expect,” said Michael Hanson, global economist at JPMorgan Chase. “It’s a threading-the-needle story," Goldberg said."They want to continue to sound hawkish — just not so hawkish as to create extreme market volatility.”
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