Investor Guide · Monetary Policy

What Happens to Stocks When the Fed Raises Rates?

Federal Reserve rate hikes affect stocks through three main channels: the cost of corporate borrowing rises, the discount rate for future earnings increases, and yield-seeking investors rotate between asset classes. Different sectors feel each channel differently — which is why the stock market doesn't simply go up or down when rates change.

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Latest Policy Signals
Updated: Mar 5, 2026 · 6:34pm ET
Ending Certain Tariff Actions
AAPL, ADM, BA, CAT
High Impact · 8/10
Strengthening United States National Defense with America’s Beautiful Clean Coal
KLAC, LMT, RTX, TSLA
High Impact · 8/10
Modifying Duties to Address Threats to the United States by the Government of th
AAPL, ADM, CVX, INTC
High Impact · 8/10
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The Short Answer
Key Points
Federal Reserve rate hikes affect stocks through three main channels: the cost of corporate borrowing rises, the discount rate for future earnings increases, and yield-seeking investors rotate between asset classes. Different sectors feel each channel differently — which is why the stock market doesn't simply go up or down when rates change.
Should I sell stocks when the Fed raises interest rates?
Not all stocks — rate hikes create sector rotation opportunities. Banks and insurers historically outperform in rising rate environments. REITs, homebuilders, and high-multiple growth tech underperform. Rotating within the market rather than exiting is typically more effective.

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Recent Executive Orders in This Area

These are the most recent policy actions tracked by AISB that are relevant to this topic. Each is scored for market relevance and mapped to affected tickers.

Ending Certain Tariff Actions
Ending Certain Tariff Actions
AAPL ADM BA CAT FDX
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Strengthening United States National Defense with America’s Beautiful Clean Coal
Strengthening United States National Defense with America’s Beautiful Clean Coal Power Generation Fleet
KLAC LMT RTX TSLA
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Modifying Duties to Address Threats to the United States by the Government of th
Modifying Duties to Address Threats to the United States by the Government of the Russian Federation
AAPL ADM CVX INTC JPM
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Continuing the Suspension of Duty-Free De Minimis Treatment for All Countries
Continuing the Suspension of Duty-Free De Minimis Treatment for All Countries
AAPL AMZN FDX SHOP TGT
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