The Federal Reserve Just Delivered Terrible News for the Stock Market, but There’s a Silver Lining for Investors Kevin Warsh wrapped up his first policy meeting as chairman of the Federal Reserve on June 17.
He adopted a hawkish tone in his commentary, which left Wall Street mulling the impact of at least one potential interest rate hike by the end of 2026
Warsh and his colleagues on the Federal Open Market Committee (FOMC) are concerned about the recent spike in inflation. The geopolitical conflict between the U.S. and Iran triggered a sharp spike in oil prices earlier this year, which continues to drive up the cost of every product that travels by truck, boat, or plane. History suggests rising interest rates are bad for the stock market.
In fact, the Fed’s last bout of rate hikes in 2022 and 2023 sent the S&P 500 (SNPINDEX: ^GSPC) index plunging into bear territory. However, here’s why the market might avoid a sharp decline this time around. Why the Fed is eyeing interest rate hikes The conflict between the U.S. and Iran led to the temporary closure of the Strait of Hormuz waterway earlier this year, through which 25% of the world’s seaborne oil transits each day.