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Mixed Opinions on Rate Hike’s Effect on Stock Prices

This week’s Sentiment Survey special question asked AAII members what impact the first rate hike by the Federal Reserve will have on stock prices. Slightly less than one out of three respondents (32%) do not expect the first increase to impact stock prices. Several of these individual investors believe the hike is or will be anticipated. About 22% of respondents expect stocks to decline immediately and then rebound or a rise to higher levels. A nearly equal number expect stock prices to fall following the rate hike announcement. A small number of respondents expect stock prices to rise (6%) or say other factors could play a role in influencing the direction of stock prices (5%).

Here is a sampling of the responses:

  • “A small drop that quickly reverses. No long-term impact.”
  • “I believe the first move will be downward, but after a few weeks, the Dow will increase.”
  • “I think it will be minor. I think [the rate hike] has been talked about enough.”
  • “Little effect if the rate hike is measured, e.g. 0.25%.”
  • “Stocks will pull back as a result of the rate hike.”
 

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