Zacks Investment Ideas feature highlights: Lennar and Wayfair

The Federal Reserve faces a 93% probability of raising interest rates by 25 basis points on Wednesday, marking the first hike since July 2023, according to futures markets. The move comes alongside August retail sales data and Thursday's housing starts and permits report, creating a volatility window for rate-sensitive sectors.

An unprecedented scenario looms: Chair Kevin Warsh could become the first sitting Fed chair in history to be outvoted on monetary policy if he opposes the hike while the committee votes to raise rates.

Lennar (LEN, LEN.B) and Wayfair (W) emerge as key names facing headwinds from rising borrowing costs. Higher rates directly pressure homebuilders like LEN through increased mortgage costs that dampen buyer demand, while furniture and home goods retailers such as W face dual headwinds from weakened housing activity and higher consumer financing costs.