According to an analysis by Macro Risk Advisors LLC, the US Federal Reserve interest rate hike that may start this week may trigger a correction in the S&P 500 index. The narrowing of corporate profit margins will impact profit prospects, and the market is also preparing for a new cycle of austerity. The S&P 500 index has accumulated a cumulative decline of nearly 1% since September, and September has historically been the weakest month for its performance. The market is concerned that energy costs remain high. Combined with recent inflation data, the yield on US 10-year Treasury bonds has surpassed 5% for the first time since 2023. In this context, traders have almost fully factored in the price the 25 basis point expectation of Federal Reserve Chairman Kevin Warsh's interest rate hike on Wednesday, compared to only about 60% a week ago. Dean Curnutt, CEO and founder of Macro Risk Advisors, said Wednesday's rate hike could cause even more pain. “We expect the S&P 500 to pull back 8%-10%, and there may be a second wave of decline in December,” he wrote in a report to clients on Monday. Interest rate hikes will “reduce the profit margins of businesses that are unable to pass costs on to consumers,” while impacting the current market that is not fully prepared for fluctuations.

According to an analysis by Macro Risk Advisors LLC, the US Federal Reserve interest rate hike that may start this week may trigger a correction in the S&P 500 index. The narrowing of corporate profit margins will impact profit prospects, and the market is also preparing for a new cycle of austerity. The S&P 500 index has accumulated a cumulative decline of nearly 1% since September, and September has historically been the weakest month for its performance. The market is concerned that energy costs remain high. Combined with recent inflation data, the yield on US 10-year Treasury bonds has surpassed 5% for the first time since 2023. In this context, traders have almost fully factored in the price the 25 basis point expectation of Federal Reserve Chairman Kevin Warsh's interest rate hike on Wednesday, compared to only about 60% a week ago. Dean Curnutt, CEO and founder of Macro Risk Advisors, said Wednesday's rate hike could cause even more pain. “We expect the S&P 500 to pull back 8%-10%, and there may be a second wave of decline in December,” he wrote in a report to clients on Monday. Interest rate hikes will “reduce the profit margins of businesses that are unable to pass costs on to consumers,” while impacting the current market that is not fully prepared for fluctuations.