10/1 Why does the stock market react the way it does to changes in
interest rates?
\_ When interest rates go up, it makes interest-bearing investments
more attractive, which takes money our of stocks. Plus, it makes it
more expensive for comsumers to borrow, which reduces spending, and
it makes it more expensive for companies to borrow, which reduces
*their* spending on expansion, among other things.
\_ Plus it makes paying off your variable-rate mortgage or credit
card bills more attractive than investing in stocks. |