Do rising interest rates matter to the stock market? Many in the financial media and advisory community are scrambling to locate periods where rates rose along with stocks. Has it happened? Absolutely. However, it was only a function of timing until it mattered.
Hedge fund manager Bill Ackman is worried about the impact of rising interest rates on his portfolio:
History shows Ackman’s worries about his long-only portfolio could be misplaced though. Earlier this year I looked at the relationship between rising interest rates and stock market performance:Ben Carlson
The table shows periods where interest rates were rising and the relative return of stocks during those periods. As Ben notes:
There have only been two instances where stocks fell during a rising rate environment. In fact, the annualized returns in each of these periods where rates rose 1% or more was 10.5%, which is right around the average long-term return for the U.S. stock market.