The stock market seems to have all its focus on the Federal Reserve today, which seems crazy if you're investing in individual stocks. But there's some logic to the Fed focus when you understand how interest rates affect asset values. This video goes through a simple model that shows how higher interest rates can dramatically lower the value of financial assets like stocks and bonds.
The market's volatility in 2022 may seem wild, but there's some logic to stocks dropping as interest rates rise.
About the Author
Travis Hoium is a contributing Motley Fool stock market analyst covering solar energy, technology, and growth stocks. Before The Motley Fool, Travis was a mechanical engineer at 3M and founded a virtual reality company. He holds a bachelor’s degree in mechanical engineering and a master’s degree in business administration from the University of Minnesota.