Posted September 20, 2018 12:17:08The stock market is expected to be back to its highest level in more than two years when the market opens at 9:00am EDT (03:17 GMT) on Wednesday.
The S&P 500 index is up about 1.8% since the beginning of 2018.
That should be enough to lift investor confidence that the Federal Reserve’s monetary stimulus has been effective and should help revive growth and inflation, said John A. Williams, chief investment strategist at Renaissance Capital.
Williams, who has $1.7 trillion under management, expects the Fed to continue its stimulus until it is certain that the economy is not on the verge of a recession.
But he said it would be “unwise” to assume the Fed will continue its QE2 program through 2020.
That would mean the Fed would need to tap $1 trillion more in new assets to boost economic growth.
Williams said the Fed’s plan to use some $5 trillion in additional QE3 stimulus to help slow the pace of the economy should boost economic confidence even further.
The central bank has been spending $85 billion on bond purchases to prop up the U.S. economy.
Williams also expects a boost to the housing market.
That should help push housing prices back toward their historical peaks, he said.
The number of homes sold fell to an all-time low in August after falling sharply for much of the year.
But housing prices are still up sharply, driven by rising interest rates, the fastest rate in the past 50 years.