Why are stocks up after an interest hike?
Can you guys explain to me why stocks are up today after the fed increased interest rates? Correct me if I’m wrong, but doesn’t rising interest rates mean less people borrowing money to put into stocks, resulting in stocks going down? Thanks. $Tesla(TSLA.US$ $Apple(AAPL.US$ $Microsoft(MSFT.US$ $Amazon(AMZN.US$ $Lucid Group(LCID.US$ $NVIDIA(NVDA.US$
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ecommerceshares : Investors (I.e. futures markets) were anticipating the Fed would potentially raise interest rates 75bps at the next meeting in June. Rates traders had that priced in prior to today’s meeting.
However, Powell made it very clear today that the committee is not considering a 75bps interest rate hike in the future at this time (likely will only be 50bps in June). Hooray for equities!
Equity valuations are now adjusted to reflect lowered than previously expected future interest rates which leads to higher prices. Think like DCF modeling and other financial measurements used to value companies in the stock market, the opportunity cost will remain lower now for longer than expected so investors are willing to pay a higher price for equities today.
Some may also argue that his positive comments around the economy also drove prices higher but I think it was mainly due to his interest rate expectations.
71676398 : it’s call: price in
VI7138Moo : ah...I see. I hd the same doubt too. thanks so much for explaining.
Mooligan : Its call pump and dump dude, to confuse amateur investors. If you follow the markets long enough you’ll often see stocks rallying when there’s a bad news only to fall in the subsequent days
bullshyt : sometimes if you are not sure, park a little like 5% of your assets into it just in case the rally continues and you don't miss it.
if the rally stops and diverts down, you can easily take lower positions to cover the 5% with your remaining 95%. 5% easy to cover. I've seen people go all in and die at that spot for a long time.
Ant_yeh : https://youtu.be/Uh1yFZ2qk4c, this video explains
Digital CatOP ecommerceshares:
Digital CatOP 71676398: well
Digital CatOP VI7138Moo: Aha... too hard
Digital CatOP Mooligan:
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