Stock market may react unusually after Fed decision

Wall Street is watching this week’s Federal Reserve decision closely, with markets widely expecting an interestrate hike after recent hot inflation data and higher oil prices. Traders are also pricing in the possibility of additional rate increases later in the year. What stands out, according to the article, is that stocks could rise even if the Fed raises rates. Normally, higher rates weigh on equities because they increase borrowing costs and reduce the present value of future earnings, but investors are focused on how the decision could affect longterm Treasury yields and inflation expectations. Market strategists say the tone of the Fed’s press conference may matter as much as the rate decision itself. A tougher stance on inflation could anchor bond yields and support equities, while a more cautious message could push longterm yields higher and add pressure to stocks.