Rising Rates: Bad For Stocks? Not So Fast

Rising Rates: Bad For Stocks? Not So Fast

Rising interest rates, persistent inflation, and an uncertain Federal Reserve outlook have once again raised an important question for investors: Can stocks continue to perform well if interest rates remain elevated or move higher?

This week, we examine what history says about stocks and rising rates, including an instructive period from the 1960s. We then bring the analysis forward to present-day market conditions and ask whether the market's own behavior is confirming—or contradicting—the prevailing macro narrative.

We also compare important technical evidence from 2022 with conditions in 2026, examine the relative performance of growth stocks versus the S&P 500 across multiple timeframes, and review what our expanding quantitative work across hundreds of ETFs is telling us about the current market environment.

Finally, we discuss one of the most difficult challenges investors face: distinguishing between normal volatility within a healthy longer-term trend and the beginning of something significantly more serious. History repeatedly reminds us that emotional reactions, recency bias, and the desire to “do something” can make that distinction even harder.

Topics include:

• Rising interest rates and stock-market performance
• Lessons from the 1960s
• Inflation and Federal Reserve policy
• Growth stocks vs. the S&P 500
• 2022 vs. 2026 market conditions
• Weekly and monthly trend evidence
• Analysis of hundreds of ETFs across multiple timeframes
• Secular trends and normal countertrend volatility
• Drawdowns, investor psychology, and action bias
• Managing risk without losing sight of long-term opportunity

As always, the objective is to objectively evaluate the weight of the evidence and remain flexible as conditions evolve. Receive SMS online on sms24.me

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