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Will rising interest rates f-ck the stock market?

Rising Interest Rates Squeeze Stocks Twice Over

By Karen Langley, NY Times

Lots of opinions on how inflation and rising interest rates will impact the stock market. Factors Spritzler is watching:

  • Will inflation actually come down? The dollar's strength makes goods/services bought abroad less expensive. Will the Chinese economic engine fire up again after the COVID stoppages and increase the supply of "stuff" to the world, helping to lower prices?

  • On the other hand, for years the stock market has been propped up by the gov's attempt to keep rates low (QE II and such). As rates rise, people start moving $$ from stocks into bonds that have become more attractive...depressing stock prices.

  • High-interest rates are a drag on American businesses (the cost of their borrowing), lowering profits. Not good for stocks.

Then there's the fact that I have no idea what I'm talking about. Eckkkk

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The stock market is facing dual stresses as investors and policy makers grapple with stubbornly high inflation.

By Anna Hirtenstein, WSJ

The higher interest rates put in place by the Federal Reserve to curb pricing pressures will eventually slow the economy and likely ding corporate earnings. At the same time, they will constrain the prices that investors are willing to pay for a slice of company profit.

Those hurdles could make it harder for major stock indexes to climb out of the gully in which they have found themselves nearly three-quarters of the way through 2022. The S&P 500 has fallen 18% this year, with rising interest rates eating into the lofty valuations that stocks enjoyed for much of the pandemic era.

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