The S&P 500 index is more than 20% below its all-time closing high earlier this year, something not seen since the pandemic-driven slump on Wall Street in 2020. Ending the trading session more than 20% below the all-time high would confirm that the index is in a bear market. The fear that the Federal Reserve will carry out aggressive increases in interest rates and that these will lead the economy into a recession is spreading in the market. The market anticipates a 30% probability that the Federal Reserve will raise rates by 0.75% at tomorrow's meeting. In a report published Monday, some investment banks, like Barclays, take the hike for granted. Therefore, market sentiment towards the Fed's monetary policy has changed sharply. The focus is no longer on whether it will pause after the two 50 bps hikes in June and July, as initially planned, but rather on the aggressive increases of 75 bps as early as tomorrow's meeting.
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