Can the stock market handle rising interest rates? The short answer is...it depends. The longer answer is...not if they REALLY catch fire.
Take a look at my MoneyShow Chart of the Day. It shows the 1-year percentage change for the CBOE 10-Year Note Index (^TNX) in red and the S&P 500 Index (^SPX) in blue.
CBOE 10-Year Note Index (Red), S&P 500 Index (Blue) – 1-Year % Change
Source: TradingView
The former is up 21.9% in the last year, while the latter is up 16.4%. So, you could argue that rising interest rates haven’t derailed the stock market.
But check out the period in March. You can see that yields rose quickly and sharply...and that stocks fell at the same time.
Then look at the last several days. It’s the same pattern. Yields started spiking again, and stocks started sliding again.
The damage isn’t severe...yet. But it’ll likely get worse if the move higher accelerates.
We’re closing in on the critical 5% level for 10-Year Treasury Note yields. That puts us at the highest since October 2023. If the move goes a bit further, Wall Street will be facing the highest yields since 2007. If you’re a trader, you should expect more volatility if that scenario materializes.
