The stock market has misread signals from the Fed and a pivot on rate hikes is still far from happening, research firm says

The stock market has misread signals from the Fed and a pivot on rate hikes is still far from happening, research firm says

The stock market misread the Federal Reserve's July FOMC meeting, according to TS Lombard.

An interest rate pivot from the Fed is far away from happening and a 75 basis point hike is likely in September.

"Inflation is easing but the US job market remains too hot for investors' own good," TS Lombard said.

Investors shouldn't hold their breath when it comes to a pivot from the Federal Reserve on its interest rate policy, according to a Monday note from TS Lombard.

The investment research firm said the stock market misread the Fed's July FOMC meeting, in which Fed Chairman Jerome Powell declined to give future rate hike guidance and instead said the central bank would solely focus on incoming data to determine its next moves.

For investors, Powell's comments served as an early indication that future rate hikes could potentially be less than the outsized 75 basis point rate hikes that happened in June and July if inflation shows signs of cooling, and it led to a more than 10% rally in the S&P 500.

But not so fast, according to TS Lombard. The firm's analysts said that another 75 basis point rate hike will happen at September's FOMC meeting, followed by another 75 basis