Jim, there are different issues on interest rates for the stock market:
Is a rise in rates due to tighter money and impending materially higher inflation, or due to fears of more inflation that largely won't be realized? If the former, then it could have a lasting impact on both the stock market and economy. However, I doubt it because of lack of notable strength outside the US.
If it is merely due to fears of higher inflation, it will likely only have a temporarily adverse impact on the stock market, with those fears getting all the blame for a correction that would have happened anyway. At this level, interest rates are not a material cost of doing business for most companies, except for financial institutions.
Therefore, I would conclude that because of the complacency the market is quite exposed to a correction, but not a serious one. For me that means being very careful about new investments and taking profits on any large advance in a stock, thereby gradually reducing exposure, but no wholesale liquidation. |
