What is the stock market impact of an increased Fed tightening? "The Federal Reserve is often influenced by politics. Politics is about current event where as the stock market is about short, medium, and long-term events. If the Fed is data driven, they need to see a slowing economy," says Sean Hanlon. "Our research consensus is that we will see a modest recession. When the Fed stops raising rates, a lower unemployment rate should facilitate a quicker recovery," Hanlon adds.