Many on Wall Street believe that surging interest rates could make the high-flying stock market less attractive, while posing a threat to sectors like tech that have benefited from the low-rate environment. The 10-year Treasury yield, used as a barometer for mortgages, student loans and credit card annual percentage rates, wallowed around 0.6% for much of 2020.
Sectors that are viewed as bond proxies led the market declines on Tuesday. Real estate, health care and utilities all fell more than 1% each.
Still, some believe that rising rates won’t spoil the rally as long as the Federal Reserve stays put and keeps monetary policy accommodative.
“The bull market in equities won’t come under stress if rates rise, as long as the reason for that rise is tied to higher growth expectations,” said Lauren Goodwin, economist and portfolio strategist at New York Life Investments. “The real trouble for equities will come when [the] Fed starts to sound more hawkish, unlikely this year. “
