Will the Stock Market Crash if the Federal Reserve Raises Interest Rates? Soaring Bond Yields Portend Trouble.
Strong jobs growth and accelerating inflation have raised the odds of Fed rate hikes, causing Treasury bond yields to spike.
Will the Stock Market Crash if the Federal Reserve Raises Interest Rates? Soaring Bond Yields Portend Trouble.
Overview
On Friday, June 5, the S&P 500 (SNPINDEX: ^GSPC) retreated 2.6% and the Nasdaq Composite (NASDAQINDEX: ^IXIC) dropped 4.1% following an unexpectedly strong payroll report. Jobs growth has now exceeded 100,000 in three straight months, something that last happened in early 2024.
The stock market interpreted that as bad news because inflation recently hit a multiyear high, which means the probability of interest rate cuts is essentially zero. In fact, investors now expect the Federal Reserve to raise rates, and the pivot to rate hikes has historically caused stocks to drop.
Details
But will the stock market crash if the Fed raises rates? Here's what investors should know.
Source
Originally published at www.fool.com.
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