Since 1983, the S&P 500 has averaged a 28% gain three years after the Federal Reserve begins hiking interest rates. However, current P/E valuations mirror 1999—the only prior instance with higher valuations at the start of rate hikes—following which the S&P 500 dropped 17% five years later, including a 49% drawdown along the way. Additionally, Polymarket prediction data shows an 87% implied probability that the Fed will increase interest rates by 25 bps following the September 2026 meeting.