- The Fed may be nearing the end of its rate hikes but its balance sheet reduction plans still pose a big risk to stocks.
- The Fed has reduced its balance sheet by $900 billion over the past year and is showing no signs of stopping.
- "Risk assets love liquidity. Continued draining of liquidity presents a risk for equities," Ned Davis Research said in a Thursday note.
The Federal Reserve may be close to the end of its rate hiking campaign based on a continued cooldown in inflation, but the central bank has one more policy move that poses a big risk for the stock market.