"When interest rates go up, it changes all the math," says Charles Bobrinskoy, vice chairman of Ariel Investments."It changes the math of buying a car, buying a house, buying a bond, and it changes the value of particularly tech stocks, whose earnings are far off in the future."
This time is no different. The S&P 500's worst stock performer to date is Netflix, which is down 70%. It's an incredible reversal for a company that The first signal came on January 5, when a readout of a Fed meeting that took place at the end of last year was released. Those minutes showed how Fed members saw rising inflation as a major risk to the economy and they would have to start raising rates sooner than expected.
Yung-Yu Ma, the chief investment strategist at BMO Wealth Management, says it has been a"very fast-moving environment, where inflation continued to surprise to the upside, and the Fed's own projections of how quickly it was going to raise interest rates ... kept surpassing expectations.
"Inflation is going to be higher for a longer period of time," says Gargi Chaudhuri, head of iShares investment strategy at BlackRock."Maybe not today's 8.6%, but still much higher than the pre-pandemic level."