92% Chance of a Fed Rate Hike: Risk of a Stock Pullback

What happened

Markets see a Federal Reserve interest rate hike as near-certain, with a 92% chance priced in. Historical patterns suggest stocks often dip after the first hike, and the article examines potential effects on the S&P 500 and Bitcoin.

Confirmed

Global impact / market context

A rate hike makes borrowed money costlier, which can reduce company profits and encourage investors to sell stocks. This could lead to a pullback in the S&P 500 and affect Bitcoin's value as investors adjust to higher interest rates.

Analyst inference

The S&P 500 represents large U.S. companies, and Bitcoin is a digital asset. Both are sensitive to interest rate changes because higher rates can shift investor money away from riskier assets toward safer options like bonds.

Analyst inference

What to watch

1. Watch for the Federal Reserve's official rate hike announcement to confirm the 92% market expectation, as this will trigger immediate investor reactions across stocks and Bitcoin. Confirmed
2. Consider monitoring the S&P 500's performance in the weeks following the first rate hike, since history suggests a possible dip, which could signal a buying opportunity. Proposed
3. Expect Bitcoin's price to potentially decline if the rate hike happens, as higher rates often reduce appetite for riskier investments like cryptocurrencies, though past performance does not guarantee future results. Analyst inference

Affected assets

• BTC — Bitcoin

Evidence

• axeladlerjr.com