Rising Interest Rates Squeeze Stocks on Both Sides, Constraining Earnings, Multiples

Stocks fell Tuesday ahead of the Federal Reserve’s next policy decision as investors grappled with the impact of rising rates on corporate earnings and valuations.

The central bank is expected to sharply raise interest rates again Wednesday in a bid to curb inflation, a move that will eventually slow the economy and likely ding company profits. At the same time, higher interest rates will constrain the prices that investors are willing to pay for a slice of those earnings.