Markets Brace for Rate Hikes as Sticky Inflation Echoes Dot-Com Era Warnings
PCE inflation remains sticky and has accelerated this year, aided by Iran-related energy prices and tariffs, pushing the Fed toward possible rate hikes later in 2026. Futures imply two 25bp hikes; meanwhile the S&P 500 CAPE ratio sits above 40, the highest since 2000, suggesting a vulnerability to corrections similar to past cycles. The article urges investors to prioritize high-quality, reasonably priced stocks with durable moats, as the market faces a potential pullback despite recent gains.