Why the stock market isn’t more rattled by higher interest rates 💪

Robust balance sheets afford a lot of financial flexibility 💰

The S&P 500 and the 10-year yield have both trended higher in recent years. (Source: FRED)

One of the more notable developments in markets in recent years has been the resilience of stock prices as long-term interest rates have risen.

The yield on the 10-Year Treasury note is currently hovering near its highest level since 2007. Meanwhile, the S&P 500, which is up 10% year-to-date, is just 4% below its all-time high.

There are many reasons higher interest rates are arguably worse than lower interest rates, ceteris paribus.

But one sentence explains why the stock market hasn’t been more rattled.