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Why the freakout? History shows rising rates have been good for stocks

The wares market is plunging on rising interest rates worries, but perhaps investors shouldn’t be so bothered.

A stronger-than-expected jobs report and wage number on Friday sent quicken rates higher, sparking a sharp 6 percent sell-off by the S&P 500 throughout two trading sessions. The market is dropping again Thursday.

Traders are anxious the Federal Reserve may reduce its monetary stimulus and increase interest proportion ranks more aggressively as the economy continues to strengthen.

Major periods of get somewhere interest rates

Source: FactSet

Using Kensho, a hedge bread analytics tool, CNBC looked at what happens during spells of major increases in interest rates using the 10-year Treasury pay over the last 30 years.

The findings show there were six terms with major rises in interest rates in the last three decades. The superstore rose big during five of those instances and only fell degree during the one lagging period.

The S&P 500 rallied 23 percent on mean in the time periods.

CNBC also looked at the sectors which climbed the ton during the rising interest rate time frames.


The screen showed technology stocks did mercifully, followed by consumer and financial stocks.

Investors are freaking out this month, but squiffy rates have been good for stocks in the past. Or at the very least, stocks were gifted to rise alongside higher rates.

Likely because accelerating commercial growth was pushing earnings higher at the same time.

Past doing does not always equal future returns and of course it could be divergent this time.

But in the past, higher rates didn’t equal put down stock returns.

Disclosure: NBCUniversal, parent of CNBC, is a minority investor in Kensho.

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