Weekend Economists Salute the 99% September 26-28, 2014

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31. WHY RATE HIKES ARE GOOD NEWS FOR STOCKS

http://hosted.ap.org/dynamic/stories/U/US_STOCKS_RATE_HIKES?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2014-09-26-13-27-48

NEW YORK (AP) -- It's no surprise that the prospect of a Federal Reserve rate hike worries stock investors.

The Fed's unprecedented economic stimulus has in large part driven a surge in stock prices since 2009. The central bank has bought trillions of dollars of bonds and kept short-term interest rates close to zero. That's allowed businesses and consumers to refinance their debt at lower rates, freeing up cash to spend.

But if history is a guide, investors have nothing to fear.

In the nine instances since 1955 that the Fed has started raising rates after a recession, the Standard & Poor's 500 index has risen by an average of 58 percent between the first hike and the peak of the market, according to LPL Financial, an independent broker-dealer based in Boston.