Why does higher interest rates cause stock market prices to go down?
(I have to answer this question. Explain why higher interest rates cause stock market prices to go down. do you think you can use this analysis to make money in the stock market?）
Answer：
Higher interest rates make savings more attractive and borrowing more expensive. If money flows into savings rather than stocks, the stock market goes down. If consumers and businesses hold back on borrowing activities, including credits, business transactions will go down which impacts company earnings. Therefore, higher rates are not favorable for the stock market. You can short financials and real estates- related stocks.
Posted: July 29th, 2010 under US Stock Market.
Tags: cause stock market prices, higher interest rates, stock market prices, stock market prices to go down