80 Years of History Warn What a September Rate Hike Could Mean for Stocks
A Fed rate hike in September doesn't have to be a reason to stop buying stocks.
Overview
As of this writing, bond investors expect the Federal Reserve to raise interest rates at its next meeting on Sept. 16. Stubborn inflation and strong job growth in August suggest that the Fed will hike interest rates in September.
A classic rule of thumb in investing is that higher interest rates tend to be bad news for stock prices. When investors can earn higher income on bonds, they might be incentivized to move money out of stocks. Does that mean you should sell stocks in case of a September rate hike?
Details
Not necessarily. Charles Schwab recently published research based on nearly 80 years of data about how Fed interest rate hikes affect stock prices. The story is more complex than "stocks always go down after rate hikes."
Source
Originally published at www.fool.com.