Why does the stock market ralley (go up) when the Feds raise the interest rate?

Answer 1

Actually most times when the Feds raise interest rates the market drops because it makes borrowing money much harder. But this time the market took off for about 200 points. Mainly, because the fed made the statement this time that this would probably be the last rate hike for a significant period of time.

Answer 2

IN general, when interest rates go up, it's not good news for stocks because it generally means a slowing of the economy is coming.

There's more to it than just the interest rate for this term, though. It's the pattern over the past few years.

"Wall Street" was expecting a .5 increase, so when it was only .25, everyone got happy and started moving their money back into stocks.

Higher interest rates usually spell doom for the stock market. Most speculate that we are at the end of the run up with interest rates, so I think investors are eager to get back into stocks. Any increase should not be warmly received by "wall street", but I think most are speculating that the rates will go down in the near future.

Answer 3

It would not continually. in reality each from time to time it does the different. anytime information is presented and the market is going up or down that modify reflects the version between what the market concept would ensue and what genuinely happened. this is real of costs of activity, client self assurance stages, cost indexes, elections, etc. Say the market concept prices were going to be higher by 1 million/2% and fell fairly because the speed statement approaches notwithstanding the speed is genuinely higher by 1 million/4%. The market may leap back up in reaction. often more desirable prices of activity are a drag on organizations and have a tendency to encourage a lot less spending by consumers. yet more desirable prices of activity also keep inflation in examine and inflation would properly be undesirable for certain organizations besides. purely as significant because the Fed's fee alterations is the verbage that accompanies the statement as that has a tendency to signify what is going to ensue next time besides.

Answer 4

Because inflation is bad for the stock market. The higher the interest rates, the more money businesses have to pay for loans.

Raising the interest rate slows inflation.

Answer 5

Because what happens in real life isn't always what is supposed to happen according to a textbook or economic theory. The market went up the other day because there happened to be more buyers than sellers....simple as that.