It’s a confusing dynamic. Stocks are generally opposed to higher rates, which can slow the economy and make bonds relatively more attractive as compared with equities. But above all else, they value stability. When expectations of a Fed hike start rising, that tends to take a bite out of the market, and we probably saw that dynamic earlier in the week. Yet at this point, a widely predicted (and clearly warranted) Fed hike would bolster stability, quiet the fears of runaway inflation, and allow stocks to focus on what really matters: The AI buildout and the earnings bonanza it continues to precipitate. And the more investors focus on that, the better the market will do.
