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A Third of Investors Expect Little to No Impact When Rates Are Raised

This week’s special question asked AAII members what impact the first interest rate hike will have on stock prices. Just under 35% of respondents said it will have little to no impact, with many reasoning that the first rate hike is well anticipated. A nearly equal number said there will be a short-term negative reaction, though the majority of these respondents anticipate stocks rebounding fairly quickly. Slightly more than 19% think stocks will fall, with some anticipating a decline of 10% or more. A small group of optimists (7%) expect to stocks react positively.

Here is a sampling of the responses:

  • “Very little. I think the anticipation of a rate hike is already priced in.”
  • “Minimal effect. It is already baked into the market.”
  • “Some investors will freak out and there will be a pullback in stock prices across the board.”
  • “A swift 5% drop after the announcement, followed by a recovery 2-3 months later.”
  • “A short-term downward blip, but recovering within 30 days.”
  • “If the market hasn’t factored a rate hike in all this time, it never will.”
 

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