Interest rates affecting stock market

Former Fed Chairman Alan Greenspan. Higher interest rates are generally viewed as bad for the stock market.

And with the Federal Reserve announcing its third rate hike since December , stocks could fall, if history is anything to go by.

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The effect of a Fed tightening cycle is different for various sectors. For banks, higher rates mean they are compensated more for lending. But for companies that make consumer discretionary goods, or things that aren't essential, higher borrowing costs imply that shoppers' spending habits may be reined in.

The only exception was in , when stocks rallied for another three years before the Great Recession. In a general sense, yes.

Is there a deterministic formula or trigger for precisely when?

How Interest Rates Affect The U.S. Markets

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You have successfully emailed the post. The Fed just hiked rates for the 3rd time — that has a history of signaling a 'major cyclical top for stocks'.

REUTERS The stock market could be about to stumble. This chart explains everything that's wrong with the economy today. Federal Reserve Interest Rates.

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