Markets Tumble as Fed Rate Hikes Weigh on Stocks, Bonds, and Economic Outlook

Stocks and bonds have both fallen due to the Fed's interest rate hikes meant to curb inflation. This is an unusual situation that has disrupted markets.

High inflation and a strong job market mean the Fed will likely keep rates high for longer than expected. This will keep borrowing costs high for consumers, businesses, and government.

High borrowing costs reduce risk appetite and spending. The housing market has already slowed dramatically due to higher mortgage rates.

Corporate profits are under pressure from high rates, threatening the recovery investors had hoped for.

Investors can choose to do nothing, move into cash equivalents like CDs and savings accounts, dollar-cost average into stocks/ETFs, buy short-term bonds, or re-evaluate their options.