How An Interest Rate Hike May Pressure Corporate Profits Ahead

24/7 Wall St.

Stock Split ImageThe secret has been out for a while that Janey Yellen and the Federal Reserve are going to begin hiking interest rates. There remains a debate over how soon this will start, and how much rates will actually rise. Investors have to consider how this will impact corporate profits, the stock market, and their overall portfolios.

If Fitch is correct, investors should expect that a rate hike, or hikes, will cause at least modest corporate discomfort. Fitch issued a report showing that higher rates should increase the cost of borrowing – bringing lower profits and causing slower growth. 24/7 Wall St. has a base case calling for the markets being easily able to absorb what is likely heading this way.

Still, there is some good news here. While higher rates might cause some discomfort, Fitch specified that it continues to believe a gradual rise would have limited impact for corporate…

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