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Why Wall Street wants higher interest rates

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Wall Street will be happy if the Federal Reserve raises interest rates Wednesday as expected, CNNMoney reported.
 
That’s because the Fed’s delayed actions in the face of a slow recovery from the Great Recession sent the message that the economy couldn’t stand on its own. A rate hike would show confidence.


Wall Street is more than prepared for this first rate hike in nearly a decade, CNN reported. For example, the Dow Jones industrial average soared nearly 400 points after the government reported strong jobs growth. That good news seemed to nearly ensure the interest rate hike and was evidence that things were returning to normal.


“The Fed will have made a spectacular hash of things if they don’t hike this week,” Luke Bartholomew, an investment manager at Aberdeen Asset Management, wrote in a recent post. Perhaps investors are finally understanding that recent rate hikes haven’t killed off bull markets in stocks.


The Standard & Poor’s 500 index actually jumped 15 percent during the last rate hike cycle, which took place between 2004 and 2006.