Question

Why does the stock market rally when the Federal Reserve raises interest rates?

Answer 1

Actually most times when the Feds raise interest rates the market drops because it makes borrowing money much harder. But this time the market took off for about 200 points. Mainly, because the fed made the statement this time that this would probably be the last rate hike for a significant period of time.

Answer 2

Because inflation is bad for the stock market. The higher the interest rates, the more money businesses have to pay for loans.. . Raising the interest rate slows inflation.

Answer 3

Because what happens in real life isn't always what is supposed to happen according to a textbook or economic theory. The market went up the other day because there happened to be more buyers than sellers....simple as that.

Answer 4

IN general, when interest rates go up, it's not good news for stocks because it generally means a slowing of the economy is coming.. . There's more to it than just the interest rate for this term, though. It's the pattern over the past few years.. . "Wall Street" was expecting a .5 increase, so when it was only .25, everyone got happy and started moving their money back into stocks.. . Higher interest rates usually spell doom for the stock market. Most speculate that we are at the end of the run up with interest rates, so I think investors are eager to get back into stocks. Any increase should not be warmly received by "wall street", but I think most are speculating that the rates will go down in the near future.