The aggressive forecast from the Fed has sparked some criticism. “The Fed is dogmatic and not at all keeping its eye on the bouncing ball of growth and of changing fortunes,” said Robert Brusca, chief economist of FAO Economics.
As to what’s behind the recent sell-off, Wall Street mostly blames it on the oil price decline. Eighty-four percent of respondents said it was a major influence behind the market decline. Chinese economic weakness and the global slowdown were the next biggest factors. But the Fed rate hike and the FOMC forecast for four rate hikes this year were seen as a main driver of the market downdraft by just around a third of the group.
Despite the recent sell-off, Wall Street expects stocks to rebound in 2016 and into 2017. The S&P 500 is seen rising to 2,035 this year and 2,158 next year from the current S&P level of 1,877. But the outlook for the 10-Year Treasury yield hit a new low with a forecast of just 2.51 percent by the end of 2016, down from the prior forecast of 2.67 percent. The 10-year yield closed Monday at 2.01 percent.
And 2016 began with the most downbeat outlook on growth in three years. Gross domestic product is seen growing just 2.17 percent this year. In each of the last two years, January forecasts in the survey for the year averaged closer to 3 percent.