Wall Street Braces for Fed Rate Hike as History Points to Stock Correction

MacroDigital Finance Impact 4
โดย Dow Jones·US·Read original
Summary · why it matters

Wall Street expects the Federal Reserve to raise interest rates this week, with CME Group's FedWatch tool putting an 87% chance on a quarter-point hike at the FOMC meeting ending Sept. 16, lifting the federal funds rate target range to 3.75% to 4% from 3.5% to 3.75%. The market also expects another quarter-point hike at the December meeting, as inflation has stayed above the Fed's 2% target since February 2021, a stretch of 66 straight months. Fed Chair Kevin Warsh said in August that responsibility for sustained, elevated inflation sits squarely with the central bank. History offers a warning: the Fed has initiated only three rate-hike cycles in the last 25 years, and after the first hike in each cycle the S&P 500, Nasdaq Composite and Dow Jones have on average suffered double-digit losses at some point in the following three months, with average maximum drawdowns of 11%, 17% and 10% respectively. The U.S. stock market has still had a strong year, with the S&P 500 up 12%, the Nasdaq Composite up 13% and the Dow Jones Industrial Average up 9% year to date, driven by massive spending on artificial intelligence infrastructure.

Impact on stocks 4

Carbon Removal (DAC)▲ · 1 stocks
CME Group Inc
CME
▲ PositiveDemandrelevance

CME Group's FedWatch tool is cited as the gauge showing an 87% chance of a quarter-point hike, highlighting usage of its rate-probability product.

Artificial Intelligence▲ · 1 stocks
Others▲ · 2 stocks
％Effective Federal Funds Rate
EFFR
▲ PositiveMonetaryrelevance

The article reports the Fed is expected to hike a quarter point, lifting the effective federal funds rate target range to 3.75%-4%.

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