Symbolic Rate Hike Won't End The Bull Market

The Fed’s quarter-point rate hike to 3.75%-4.00% is seen as symbolic, aiming to restore inflation-fighting credibility rather than start a new tightening cycle. Long-term bond yields remain elevated, with the 10-year closing at 5.02%, signaling persistent market skepticism and potential near-term market volatility. Robust economic growth persists, as evidenced by August retail sales up 1.2% and the Atlanta Fed raising Q3 GDP projections to 5.1%. S&P 500 resilience and upward earnings revisions suggest any September market pullback could present a buying opportunity ahead of Q3 earnings.

The Fed raised its benchmark rate by a quarter point yesterday to a range of 3.75%-4.00%, which came as no surprise to the consensus of investors, as Fed funds futures pegged the probability at better than 90%.