Further tightening from the Federal Reserve could weigh down the U.S. economy next year, warns Peter Boockvar, chief market analyst at The Lindsey Group.
"The Fed only has to move a little bit to have a broader ripple effect," he told CNBC.
"I think the immediate impact has been the rising cost in capital for corporate America. The Fed's only raised 25 basis points this year, but high-yield spreads have widened by about 250 basis points. Even investment-grade [yield spreads] have widened by about 100-plus," he said.
"A 25-basis-point rate hike has translated into much greater increases in the cost of capital for many companies," he said.
"This is a credit-driven economy as we know, so that rise in the cost of capital is going to have an impact, whether that's on company expansion plans, or whether that's on stock buyback plans."
Boockvar isn't the only one to warn about the Fed's influence over an unstable economy.
"A big point is being lost in buzz of the holidays, end-of-year excitement and the market’s hubbub over the start of the first Federal Reserve policy tightening campaign in more than a decade: America's economy is stalling," The Fiscal Times
If the trend continues, stocks could weaken in the new year, the Times warns.
"It's likely that financial markets will grow increasingly concerned about the Fed's more aggressive rate hike forecast for 2016, which calls for four 0.25 percent hikes, while futures are pricing in between two and three hikes," writes Anthony Mirhaydari.
"A faster rate of Fed tightening could very well result in further economic weakness at a time of vulnerability."
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