In September, the Federal Reserve raised interest rates for the first time since 2023. It didn't rattle the markets. In fact, many stocks continued to rally afterward, seemingly unshaken by the news. However, things could go much differently if there's another rate hike around the corner, which many investors and analysts believe will happen, particularly with oil prices remaining high due to the ongoing war in Iran. According to the CME FedWatch Tool from the CME Group, the probability of a rate hike for the Dec. 9 Fed meeting is up to 90% right now. While the probability of a hike for the October meeting remains low at 17%, the market appears to be anticipating another rate hike before the year is over. This could be incredibly problematic, as it could mean Fed chair Kevin Warsh is aggressively targeting inflation to bring it down to 2%. Unfortunately, with inflation remaining persistent, investors may be concerned about a repeat of 2022, when rising interest rates crushed the market -- the S&P 500 (SNPINDEX:^GSPC) declined by more than 19% that year.
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