Three out of Five Investors’ Outlook Unaffected by Rising Interest Rates

This week’s Sentiment Survey special question asked AAII members how, if at all, this year’s increase in interest rates is influencing their sentiment toward stocks. Nearly three out of five respondents (58%) said the rising rates are not having any impact. Some of these respondents said that the increases are already priced in or haven’t been large enough or that they are keeping their focus on the long term. Others said they are not influenced now, but if rates increase faster than expected their opinion may change. Nearly 28% of respondents said the increase in interest rates has prompted them to become more cautious or they expect rising rates to be a drag on further stock price gains. About 10% view rising rates as a positive, describing them as being reflective of economic growth, boosting rates on savings or making financial stocks more attractive.

Here is a sampling of the responses:

  • “Not changing my sentiment at all; however, I am hoping rates will not increase too quickly.”
  • “Does not seem to have an effect. I think the tax cuts will overcome interest rate jitters.”
  • “I think at least three interest rate increases are priced into the market. If there end up being four or five, it would be a different story and a new ball game.”
  • “Increases in interest rates will be accelerated by rising inflation, which will combine to slow the stock market.”
  • “It will slow down the rate at which stocks increase.”
  • “The increases have raised market volatility, so I’m using the resulting dips to finally buy more stocks.”

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