Fed Rate Hike Cycle Sparks Market Correction Fears

The Federal Reserve recently raised interest rates for the first time since 2023. It's likely to continue raising them in the near term as it works to bring inflation under control.

Historically, the S&P 500 has declined once the Fed starts raising rates, but it typically recovers within a year. The index fell between 1.6% and 15.5% three months after the first hike in five of the last six Fed rate-hike cycles.

LPL Financial found that the S&P 500's median gain was 6.8% 12 months after a rate hike cycle began. One strategist is building cash and a watch list to capitalize on any market decline, with Berkshire Hathaway and Coca-Cola at the top of their list.