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.”