Wall Street Sees Stock Rally Surviving Fed Rate Hike Despite Risks

Major Wall Street desks expect the US stock rally to withstand an impending Fed rate hike. According to historical data, tightening cycles rarely trigger immediate bear markets without an accompanying economic recession.

The current equity bull market has been resilient despite rising bond yields and renewed commodity volatility. Strategists argue that robust corporate balance sheets and steady earnings growth provide a sufficient cushion against tighter monetary policy.

Goldman Sachs equity strategists maintain a firmly bullish stance, asserting that any immediate market turbulence will prove temporary because investors have already discounted the expected 25 basis point policy shift.

Morgan Stanley strategists offer a more cautious assessment, warning of a potential 10 percent market correction if energy and inflation pressures accelerate. However, they note equities can absorb higher yields if driven by nominal growth.