Wall Street wary of sustained Fed rate hikes impacting market rally

US Stock Market: Wall Street braces for Fed hike as rising yields threaten stock rally

Fed meeting Wednesday: market pricing 80% probability of 25-basis-point rate hike after August core inflation accelerated above expectations. Higher rates and Treasury yields (10-year approaching 5%) compress equity valuations and increase borrowing costs for companies, particularly impacting small-cap and leveraged tech firms while threatening the 12% stock rally supported by AI infrastructure investment.