Stock Valuations for Idiots--The Fed Hikes Rate 75 bps and Stocks Go Up! Why??!!

Yesterday the Fed hiked its rate 75 bps and stocks reacted by going higher. The reaction seems odd given that rate increases are designed to reduce consumer demand. Won't that decrease corporate profits?

That was the question a viewer named Mike asked me in an email:

"Stock Valuations for Idiots. I watched the Fed news and commentary all day today. The experts on CNBC were begging for substantial interest raises by the Fed. They received a 75 Basis point rise and future raises are promised. The stated purpose was to reduce consumer demand. All indexes then substantially went higher.

I don’t get it. How does reduced consumer demand correlate to increased equity values?"

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While still working as a trial attorney in the securities field, I started writing about personal finance and investing In 2007. In 2013 I started the Doughroller Money Podcast, which has been downloaded millions of times. Today I'm the Deputy Editor of Forbes Advisor, managing a growing team of editors and writers that produce content to help readers make the most of their money.

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