The Fed Just Hiked Interest Rates. Are There More Hikes on the Way?

The Federal Reserve raised interest rates by 25 basis points this week under new Chair Kevin Warsh, and futures markets are pricing in an 87% probability of another hike ahead. FOMC projections and rising Treasury yields signal additional rate increases through 2026 and 2027 as the central bank sustains its inflation fight.

The S&P 500 climbed 1.1% following the announcement, defying the typical negative equity performance during tightening cycles. Investors interpreted the Fed's commitment as reducing tail-risk uncertainty around inflation persistence.

For dividend-focused portfolios holding SCHD and growth-heavy QQQ, the rate path carries divergent implications. SCHD's value-oriented holdings historically show relative resilience when rates rise from already-elevated levels, while QQQ's long-duration growth names face renewed multiple compression risk if the 87% probability materializes. The 1.1% S&P bounce suggests markets may have already priced in the next move, but the 2026-2027 timeline extends the headwind for rate-sensitive sectors longer than many positioned for.