RE:RE:So far a great day 7 years and 2 blown up accounts. I've done my time!
Interest rates affect all asset prices. Assets being cash, stocks, commodities, real estate, and virtually any other economic asset. Low interest rates mean borrowing is cheap and thus drives buying of these assets via cash. Economic law dictates the more demand, the higher the price, so asset prices rise. Inflation! Conversely as prices rise, the dollars used to purchase these assets are less valuable. They buy less stuff!
US rates have been at record lows, for record length which is why US stock market is at record highs. But the US has also stimulated further via QE, basically printing money out of thin air pushing prices even higher. Take away the cheap money by hiking rates and you take away the artificial demand you created, causing contraction and selling (like you saw after Dec rate hike). Deflation!
The question is not how rate hikes will affect stocks or the economy, that's economics.
The question is: "How, when, and how much will Janet Yellen raise or lower rates?"