The Institute for Supply Management's (ISM) manufacturing index climbed to 55.6, its highest reading since May 2022 and the seventh consecutive month of expansion. Concurrently, S&P 500 net profit margins hit a record 16.7% in Q2 2026. These strong economic indicators, coupled with firming inflation and rising energy prices linked to the Iran conflict, are leading analysts to shift their expectations for the next potential Fed rate hike from 2027 to 2026, as the resilient economy provides the central bank more room to tighten policy further.