The Chicago Journal

FED Rate Hikes Tested The Economy, How It Affects The Stock Market?

FED rate hikes have hit the headlines in 2022 up to six times. Rate hikes are good to fight inflation, and the 0.5-0.7 percent points added would do that in 2023. 

Expectations are rife that the FED will begin a slowdown in its attempt to control inflation, which hit over 8 percent for the first time in many years. The FED will prefer lower base points—at least below 50, to protect other stakeholders in the market. However, some experts expect that next year; the FED will also raise interest rates to further lower inflation to strike a balance between the interest rates vs. stock market debates.

While the FED’s focus is on inflation, other areas of the economy have felt the hit too. Noteworthy, commodities like crypto, stocks, and oil have had a massive hit, as people rush to put their money in safe areas. 

Pressure on Markets

About a year ago, in November 2021, crypto stocks peaked. Indications were low of any fed rate hikes to come, though inflation was slowly crippling after an extended period of Covid lockdowns. However, come December of the same year, the markets started to look forward to new hikes set for the New Year—2022. 

In January 2022, many commodities, including the top indices, reversed some gains picked in the bullish run of late 2021. It was also a downhill period for crypto, which had a magnificent 2021.

Since then, many stocks have reversed the gains made in 2021 and the crypto industry has witnessed a massive pullback.

Some small hints of positivity in the fourth quarter helped build investor momentum. However, that was not enough to make the S&P 17 percent down since the beginning of the year. Nasdaq is lower by about 30 percent.

The significant casualties of the year were the crypto markets, which rely heavily on a low-interest environment to thrive. The action by the FED made the environment less suitable for crypto commodities to thrive. Other high-growth stocks not in the digital asset domain, like Cloudflare, have also seen a turbulent year—losing by as much as 80 percent. 

Bitcoin and Ethereum, which control the bulk of the crypto industry, have all dropped by about 75 percent since November 2021 when they reached a milestone.

Effect of Rates Rising More

It is too early to predict whether central banks will continue to push the interest rates higher in the New Year. Noteworthy, many investors have already factored in the impact of new rates on their investments and have already made many adjustments to cover the next six months. As of now, the bulk of interest rate rises has already happened, meaning minimal impact on the rates planned for next year.

Ultimately, inflation has pushed more money out of the financial markets and pushed it elsewhere, meaning those wishing to take new positions in the market are already fewer. The volatility period will continue to follow the period of high interest. However, no one knows to what extent the market will continue to expect little interest from investors.

Noteworthy, as with the markets in the past. Periods of little investments or high volatility have often accompanied other periods of extended bullish runs. At some point, readjustments will happen, especially when the FED finally achieves its goal of lower inflation at some point in 2023.

Fears of Recession

With many market segments faltering, the fear of a recession has become more significant than at any other point. A likely inflation would bog down the market even further. However, the ultimate result is that the markets will rise again at some point. 

Bottom Line

Rising interest rates have a significant influence on the direction of the stock market. The stock market underperforms in an environment of high-interest rates. Commodities like crypto also are not spared when rates move too high. Ultimately, readjustments will caution the markets when the FED reserve finally achieves its goals.

Stock market movement largely positive in October this year

The October stock market is known for its significant declines over the years, most notably in 1929, 1987 and 2008.

However, the stock market successfully managed to avoid similar crashes in 2022.

Wall Street investors have nothing to fear as the month closes.

The market continued its streak from October on Monday and recorded another strong rally.


The Dow Jones closed up more than 420 points (1.3%) on Monday.

Additionally, the Dow Jones rose almost 10% in October, recovering from the sharp falls in August and September.

However, blue-chip industrials and other giants of the US economy remain 13% down this year, including:

  • Apple (AAPL)
  • Microsoft (MSFT)
  • Coca-Cola (KO)
  • McDonald’s (MCD)
  • Disney (DIS)

Read also: Huge rally in the stock market a good sign in October

Federal Reserve

The market rebounded this month, hoping the Federal Reserve would reverse its aggressive rate hikes to fight inflation.

Strong interest rate hikes are expected during Fed meetings on November 2 and later in December.

However, some people hope the Fed can suspend rate hikes next year.

The solid third-quarter results also help strengthen stocks.

The bear market

The S&P 500 rose 1.2%, while the Nasdaq gained 0.9% on Monday.

Both indexes also posted decent gains for October.

The Nasdaq is up more than 3.5%, while the S&P 500 is up almost 6%.

Unfortunately, the S&P 500 and Nasdaq are still down more than 20% each this year, putting them in a bear market.

The Nasdaq was in the green zone on Monday, which is better positioned than others.

Read also: US stock market goes steady after worst day since 2020

The Chinese market and other stocks

Several leading Chinese tech stocks trading in the US fell on fears of a crackdown in China.

The crackdown stemmed from news that Xi Jinping will serve for a third term as China’s leader.

Meanwhile, the e-commerce company Pinduoduo (PDD) lost more than 25%.

Electric vehicle manufacturers and significant Chinese tech stocks reported double-digit loss rates, including:

  • Nio (NIO)
  • Xpev
  • Li Auto
  • Alibaba (BABA)
  • Baidu (BIDU)
  • Tencent (TCEHY)

Tesla shares fell 1.5%, while Starbucks fell 5.5%.

The fast food giant Yum! Brands (YUM) fell 2%, while Yum China (YUMC) fell 14%.

Yum China distributes several popular food chains in China, such as:

  • KFC
  • Pizza Hut
  • Taco Bell

Wynn Resorts and (WYNN) and Las Vegas Sands (LVS), casino owners that have properties in Macau, also fell.


October surprise? Stocks continue to sizzle this month


Huge rally in the stock market a good sign in October

A new month often opens up new opportunities for businesses, and October got off to a good start with positive news.

Despite growing concerns about the financial health of European banking giant Credit Suisse and weak economic data, the stock market rebounded early in the fourth quarter.


The Dow jumped to 765 points (2.7%), the biggest gain since mid-July.

Meanwhile, the Nasdaq and the S&P 500 gained 2.3% and 2.6%, respectively.

The third quarter and stocks ended in September last Friday, with stocks reaching a low milestone.

On Monday, however, all but one of the Dow’s 30 stocks finished higher, a sign of market volatility.

Johnson & Johnson (JNJ) was the only stock not to reach the same heights as the others.

Investor concerns

Ongoing inflation continues to worry investors over the Federal Reserve’s aggressive rate hikes.

Many fear that attempts to contain price increases could send the economy into recession.

In the course of 2022, inventories dropped dramatically.

The CNN Business Fear & Greed Index, CNN’s way of measuring stock market movements, continues to show Extreme Fear levels.

Monday’s market rally, however, could signal a perverse “bad news is good news” rally.

Meanwhile, fears of rising tensions at Credit Suisse (CS) could prompt the Fed to ease aggressive rate hikes.

Bond market investors rely on stress.

Treasury bonds and inflation

The benchmark 10-year Treasury yield has fallen in recent days.

Where it briefly rose above 4% last week, it fell to 3.66% on Monday.

Inflation also remains a problem.

However, if the Fed and other central banks are concerned that a troubled European bank could lead to another financial contagion, now is not the time to raise interest rates by a historic amount.

Last week, traders estimated there was a greater than 70% chance that the Fed would hike rates by three-quarters of a percentage point for the fourth consecutive session at its Nov. 2 meeting.

Today, the probability of a rate hike of this magnitude has fallen to 50%, with the probability of a more modest hike increasing by half a point.

The latest US manufacturing data could also prompt the Fed to reconsider how it should raise interest rates.

Economic progress

The economic nonprofit, the Institute for Supply Management, reported that the influential manufacturing index fell in August.

The index also fell below Wall Street forecasts.

Both can be seen as a sign that Fed rate hikes to slow the economy and reduce inflation are having the desired effect.

On Monday, Jim Baird, chief investment officer of Plante Moran Financial Advisors, released a report stating:

“The economy is slowing – a reality that is increasingly apparent in the manufacturing sector.”

“The good news is that there are welcome signs that prices are stabilizing.”

The price of oil and other stocks

On Monday, a rise in the price of oil boosted energy supplies, but it also brought bad news for consumers.

Chevron (CVX) was the highest share in the Dow, while the energy sector was the best in the S&P 500.

Oil stocks rose after reports suggested that the OPEC+ blockade on oil producers is considering a cut in production.

The cut should mitigate the recent steep drop in crude oil prices.

Investors will also be relieved that the British pound, which has recently fallen to record lows against the US dollar, has recovered after the new UK government abandoned plans to cut taxes on wealthier Brits.

However, a stronger pound could increase fears of rising bond yields and rising credit costs in the UK.

Meanwhile, Tesla (TSLA) was among the stocks that did not participate in Monday’s rally.

The company’s shares fell nearly 9%, making it one of the worst performers in the S&P 500.

Over the weekend, it also reported disappointing delivery and production figures in the third quarter.

On the other hand, Tesla’s rival GM (GM) recovered after posting positive sales in the third quarter.


Stocks kick off October with a huge rally

US stock market goes steady after worst day since 2020

Markets finally stabilized early Wednesday after U.S. stocks posted their worst day, the most recent in June 2020.

The good news eclipsed a precedent of higher-than-expected inflation in August.

European stocks

Equities in Europe posted mixed results in several countries.

In Germany, the DAX (DAX) opened down 0.2% while the French CAC 40 (CAC40) was flat.

Meanwhile, London’s FTSE 100 (UKX) fell 0.7%. Italy’s benchmark index showed positive signs, rising 0.7%.

US stocks

While European stocks had a mixed performance, US stock futures improved as they traded slightly higher.

“Equity futures suggest that the rout stops here,” Robert Carnell, regional head of Asia-Pacific research at ING, wrote in a report.

US stocks had their worst day since June 11, 2020 on Tuesday after August inflation data surprised investors.

The US CPI, which includes major goods and services, rose 0.1% in July.

The rise contradicts economists’ forecasts of a 0.1% decline.

Despite falling for the second consecutive month, annual inflation remained stubbornly high, with prices rising 8.3% year-on-year.

The stocks

  • The Dow (Indu) was down 3.9%
  • S&P 500 (INX) fell 4.3%
  • Nasdaq Composite (COMP) plunged 5.2%

Impact of inflation on the Asian market

The move in the US stock market gave investors a sigh of relief.

Initially, they feared that higher-than-expected inflation would prompt the US Federal Reserve to aggressively raise interest rates.

The decision would have caused serious damage to the US economy.

Carnell also wrote that daily US inflation data was flooding Asian markets.

She noted that core inflation in the United States, which excludes volatile categories like groceries and gasoline, hit 6.3% last month.

The monthly gain of 0.6% was double what economists expected.

Asian stocks

  • Japan’s Nikkei 225 slid 2.8%
  • South Korea’s Kospi lost 1.6%
  • Shanghai Composite (SHCOMP) Index slid 0.8%
  • Hong Kong’s Hang Seng fell 2.5%

Additional information

In the United States, consumers are struggling to adjust to rising prices as markets have cut almost everything from groceries to school supplies.

Meanwhile, annual inflation in the UK fell to 9.9%, reflecting lower petrol prices. In the previous month, however, it had risen 0.5%.

Additionally, the UK’s annual CPI rose 6.3% on lower energy and food bills.


Markets steady after worst day for US stocks since June 2020

Warin: Helping Regular People Accumulate Wealth

Today, more and more people see the need to invest their money to achieve financial stability and freedom even before they reach the retirement age. The stark reality of investing, however, is one must dedicate a lot of time to learn how to manage their own portfolios. Warin, an artificial intelligence investor, is helping even simple individuals make strong investments.

Designed by software engineer and entrepreneur Danny Kabakibo, Warin is believed to be the next big thing when it comes to stock market investment applications. Warin has the ability to analyze large amounts of data, unique technology, and fast computers and see stock market trends that are not necessarily detected by professionals. He was specifically built to give users an advantage when it comes to investing. 

Danny Kabakibo and his software team designed Warin to be simple, intelligent, and powerful. It is so easy to use that the user does not have to be a tech-savvy individual to operate it. Minimal effort is needed to use it, and it is able to give instant decisions when the user needs them most. Imagine building an impressive investment portfolio by simply making a few clicks on a smartphone. 

“Nothing like this exists on the market. We are revolutionizing the industry and defying what was previously thought possible,” explains Danny Kabakibo.

Danny’s inclination towards software engineering and entrepreneurship began when he was only ten years old after he was gifted with his father’s old computer. He would tinker with the computer somewhere in-between finishing his homework and try to learn its operating system. He eventually figured out a way to learn HTML and CSS coding by reverse-engineering the code for the Google search webpage. He remembers adding photos of himself on the Google homepage and even changing the text to something that a 10-year-old would find highly amusing. 

His keen eye for details and ability to learn new things in a short period of time eventually gave rise to a web design business and a custom video game server that allowed Danny to sell perks to thousands of gamers online. His knack for software technology also paved the way for other projects such as autonomous drones and artificial intelligence. 

While Danny’s software engineering skills were initially self-taught, he also possesses an uncommon way of seeing things. This unique perspective allows him to come up with innovative products that benefit a lot of people. 

Warin is just the beginning of several other products that Danny wants to develop years from now. He also plans to invest in companies that drive growth for humanity in general. He is also seriously looking into the possibility of integrating technology into the human body to improve the quality of life of all. 

Additionally, Danny Kabakibo is interested in creating an AI, more intelligent than humankind, that will be able to answer critical questions about the nature of reality and help solve humanitarian conflicts such as COVID-19.

Although it seems like he has accomplished so much at a young age, Danny Kabakibo is confident that it’s only the beginning, and there will be more to come. 

Learn more about Warin by visiting its website.