Hawkish Fed signals it may have to raise rates sooner to fight inflation.

Higher interest rates tend to negatively affect earnings and stock prices (with the exception of the financial sector). When Fed rate hikes make borrowing money more expensive, the cost of doing business rises for public (and private) companies. Over time, higher costs and less business could mean lower revenues and earnings for public firms, potentially impacting their growth rate and their stock values.

As a general rule of thumb, when the Federal Reserve cuts interest rates, it causes the stock market to go up; when the Federal Reserve raises interest rates, it causes the stock market to go down.

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