S&P 500 on Brink of 8-10% Pullback as Federal Reserve Rate Hike Looms

The S&P 500 index may be in for a rough ride as the Federal Reserve's interest-rate hike looms. Macro Risk Advisors LLC has warned that a pullback of 8-10% could occur, with a potential second leg of downside in December.

This warning comes on the heels of the S&P 500 falling nearly 1% since the start of September, a month historically ranked as the weakest of the year. Energy costs have soared, and recent inflation data has pushed the yield on the U.S. 10-year Treasury bond above 5%, a level not seen since 2023.

Dean Konat, founder and CEO of Macro Risk Advisors, believes that if the interest-rate hike is implemented this week, markets will face heightened pressure. He notes that interest-rate hikes will squeeze the profit margins of companies unable to pass on costs, delivering a volatility shock to an unprepared market.