When interest rates rise, stocks usually feel the pain — and this week's trading was a live example, with the 10-year Treasury yield near a 24-year high.
Two forces do the damage. Higher rates shrink what a company's future earnings are worth today, which hits fast-growing stocks hardest. They also lift borrowing costs on everything from mortgages to business loans, slowing spending across the economy.
However, patient investors can pick up quality companies at cheaper prices during rate-driven selloffs. Watch the bond market when trading resumes Monday — yields often tell the story before stocks do.
Not financial advice.
