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Stocks will continue to plummet as the Federal Reserve continues to hike interest, according to emerging-markets investor Mark Mobius.

In an interview, the legendary fund manager warned the worst is yet to come for investors despite the S&P 500 surging by over 8% last month.

"We probably have another leg down as the Fed continues to raise rates," Mobius told MarketWatch last week. "I expect rates to go much higher and that means a number of companies will be in trouble."

Investors have struggled with rising interest rates since March as the US central bank attempts to tame inflation - which hit a 41-year high of 9.1% in June.

However, a bullish sentiment surrounded the market last month after the Fed's chairman Jerome Powell indicated that he favored a softer, more data-driven approach to rate hikes.

Mobius has predicted that rates will have to surge up 7% to drag down inflation to the Fed's target 2% range. He warned the Fed would likely remain hawkish, thereby creating another problem for the already struggling growth stocks.

"I expect rates to go much higher," Mobius said. "That means…the glamorous tech stocks with no earnings and dependent on more and more cash inputs will be in trouble."

Even after last month's correction, the S&P 500 and Nasdaq have respectively fallen 13.3% and 19.6% year-to-date. Mobius added that he expects the sell-off to continue until markets reach a point of "complete surrender."

"Of course, we must realize that we are already in a bear market but the endgame requires complete surrender on the part of investors," he said. "Currently, there is a lot of hope."