MRA says S&P 500 could pull back by 8% to 10% if the Federal Reserve resumes rate hikes

MacroRiskAdvisors (MRA) CEO Dean Curnutt stated that the potential start of a rate hike cycle by the Federal Reserve could put pressure on the S&P 500 Index, and he expects that US stocks may experience a correction of 8% to 10%. According to Curnutt, rising energy costs and recent inflation data have driven the yield on the US 10-year Treasury above 5% for the first time since 2023, and the market has significantly increased its bets on Fed rate hikes. He believes that rate hikes will compress the profit margins of companies unable to pass on costs, while also delivering a shock to a market that is currently not adequately hedged against volatility. He noted that the current market environment is similar to 2018, when the S&P 500 Index peaked in September, then fell by about 10% cumulatively in October and November, and weakened further in December. Curnutt anticipates that if the Fed continues to raise rates, a second round of declines may occur in the market by the end of the year.