Wall Street's Worst Fear Returns: Fed May Raise Rates Again Despite Market Selloff

Investors are increasingly concerned that the Federal Reserve may raise interest rates again in December, even after a sharp selloff in technology stocks.

The Federal Reserve may not be finished raising interest rates.

Despite last week's sharp technology selloff, financial conditions may still be too loose to bring inflation under control.

Reuters columnist Mike Dolan noted that recent market declines have tightened financial conditions, but possibly not enough to change the Fed's inflation-fighting strategy.

US inflation reached 3.7% in September, well above the central bank's 2% target.

Federal Reserve Chair Kevin Warsh has repeatedly warned about persistent inflation, while acknowledging strong economic activity.

Markets currently expect the Fed to leave rates unchanged at its October 27–28 meeting.

However, another increase in December remains possible.

For AI companies, higher interest rates make financing expensive data centers and infrastructure projects more difficult.

The risk for Wall Street is that technology stocks could face additional pressure even if corporate earnings remain strong.

A December hike is not guaranteed, but investors are unlikely to ignore the possibility.