Fed Rate Hike Looms as Investors Brace for Market Volatility

Investors are bracing for a possible interest rate hike at the Federal Reserve's upcoming meeting on September 16.

The central bank has been under pressure to raise rates due to persistently high inflation, which has consistently exceeded its 2% annual target.

Bets have grown that the Fed will hike by a quarter percentage point after data showed consumer inflation picked up in August, with core Consumer Price Index rising by a hotter-than-expected 0.3 percent.

Higher interest rates could undercut stock performance, raising borrowing costs for consumers and companies, creating more investment competition from bonds, and pressuring equity valuations.

The benchmark S&P 500 has pulled back recently and was about 2% below its mid-August all-time high, while US Treasury yields have climbed to multiyear highs, with the benchmark 10-year yield closing in on a 5% level that could cause more trouble for stocks.