TKer by Sam Ro

Share this post
The Fedโ€™s coming rate hikes don't spell doom for stocks ๐Ÿ›
www.tker.co

The Fedโ€™s coming rate hikes don't spell doom for stocks ๐Ÿ›

Earnings could keep growing as the Fed raises rates ๐Ÿ“ˆ

Sam Ro, CFA
Feb 9, 2022
4
Share this post
The Fedโ€™s coming rate hikes don't spell doom for stocks ๐Ÿ›
www.tker.co
The S&P 500 rallied during 12 of the past 13 rate-hike cycles, registering 8.1% average annualized gains.

Historically, stocks have climbed during periods when the Federal Reserve embarked on a new cycle of interest-rate hikes.

The S&P 500 rallied during 12 of the past 13 rate-hike cycles, according to BofAโ€™s Jared Woodard. On average, the index climbed 16% during the cycles, which amounts to 8.1% annualized.

Sure, higher interest rates mean higher financing costs, which would be an economic headwind, all else equal.

However, the Fed usually begins to tighten monetary policy during periods when the economy is growing and has some momentum. And economic growth tends to be associated with corporate earnings growth. As TKer readers know, earnings are the most important driver of stock prices.

Keep reading with a 7-day free trial

Subscribe to TKer by Sam Ro to keep reading this post and get 7 days of free access to the full post archives.

Already a paid subscriber? Sign in
Previous
Next
ยฉ 2023 Samuel Ro
Privacy โˆ™ Terms โˆ™ Collection notice
Start WritingGet the app
Substackย is the home for great writing