2027 US stock market: Dutta mentions the possibility of the Fed's risk of excessive tightening

Neil Dutta, head of economics at Renaissance Macro Research, warned that Federal Reserve over-tightening poses a major risk to U.S. equities in 2027, arguing in a MarketWatch interview that a strong labor market and falling unemployment alongside inflation drifting from the Fed's target could push the central bank toward more aggressive tightening. He framed the divergence between economic and price trends as the core concern, saying he clearly sees over-tightening as a significant danger. The warning comes as investors question the durability of the AI investment theme, though Dutta treats the rate path as a separate driver for stocks. Watch next for labor-market and inflation data that could shift the Fed's reaction function, and for whether AI-linked valuations hold up if policy tightens further.