Why do stocks fall when the Fed considers raising interest rates?

A top-level committee of the Federal Reserve, the US’ central bank, is meeting this week to discuss when it should begin raising interest rates.  Why do stock prices fall when a country’s central bank boosts interest rates?

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Three reasons why most of us shouldn’t worry about the global stock market meltdown

On Monday, the world’s stock markets continued to fall after suffering steep losses the previous week.  The Dow Jones Industrial Average, one of the most widely followed indexes, opened for trading by dropping more than 1,000 points in the first six minutes, or about 6.5%. This thousand-point drop was the largest intraday plunge in the index’s history. Continue reading

Did You Know You Can Purchase Part of A Major Central Bank?

Every day the business press is filled with stories about what key central banks like the Federal Reserve, the Bank of England or the Bundesbank are  doing to influence global economic affairs.  For most of us these banks are relatively abstract institutions that control our lives but over which we have no control.  However, there is one central bank that is unique.  The Bank of Japan, which controls the money supply of the 3rd largest economy in the world, has shares traded on one of the Japanese stock markets.  This means you can buy and sell parts of this central bank just like buying and selling shares of a major corporation like Google or Toyota.  Not many people know about this and even fewer trade the stock.  The day this was written just 5 trades happened. Continue reading

Does a Booming Stock Market Really Help Holiday Sales?

On Friday the U.S. stock market hit another all-time high!  The rising stock market is leading to articles in places like the WSJ and CNBC that suggest a booming stock market is good for holiday sales.  Unfortunately for stores, restaurants and online retailers, no matter what the stock market does there will not be much impact on their sales because of one simple reason. Continue reading