Stock Market Investors Just Got Bad News From the Federal Reserve

Three Federal Reserve officials voted to raise interest rates in July, signaling the potential start of a new tightening cycle. With PCE inflation sticky above the Fed's 2% target for over five years, traders expect rate hikes beginning in September 2026. Historically, the S&P 500 and Nasdaq Composite have fallen an average of 10% and 12% respectively within three months following the first rate hike in a tightening cycle, suggesting investors should prepare for potential market corrections.