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When the Fed finally raises rates, stocks will go nowhere
As investors anticipate that the Federal Reserve will raise rates in a few months, they are also contemplating what this means for stocks. In a note Tuesday, Barclays' Jonathan Glionna noted that rate hikes happen when the economy is in good shape, meaning corporate earnings are likely also strong. Stocks rallied after previous rate hikes because earnings growth offset lower valuation multiples, which investors reduced in reaction to higher rates — higher rates raise the cost of borrowing for companies, impacting profits. However, earnings growth is lukewarm this time. And so while stocks likely won't rally ... (full story)
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