Stock Market Adapts to Higher Interest Rates Era

The US stock market is facing a new era of higher interest rates after the Federal Reserve raised its benchmark rate by 25 basis points to 3.75-4.00 percent on September 16.

This was the first hike in more than three years, and the Fed signaled that it may not be the end of the tightening cycle.

The economy has been stronger than expected, with US consumer prices rising 3.4 percent year-on-year in August, while core inflation rose 0.3 percent during the month.

The Fed's latest projections show policymakers now expect the federal funds rate to be around 4.1 percent at the end of both 2026 and 2027, up from a median projection of 3.6 percent in June.