Is the end of the US bull market nigh? – The Wall Street Journal
DUBLIN – We all know that timing the market isn't really a "thing" – even the Oracle of Omaha Warren Buffett says no one can really do it. But it is still interesting to note general trends, patterns in market rates and price levels that seem to point one way or another. For example, there is a long and potent historical relationship between interest rates and stock prices. In general, when rates go up, stock prices go down. There are two reasons for this. First, if they can get a decent return from a bond or even a savings account, investors are likely to pick the lower risk option and skip the equities. Second, when rates are low, companies borrow a lot and then, when rates rise, they have to spend a lot of money paying back their debts instead of investing in their business or paying dividends, so stock returns tend to suffer in a rising rate environment. That's why recent spikes in long-term US interest rates are giving some investors pause. If rates continue their upward march, it may not be long before sentiment turns on equities and the nine-year bull market loses momentum. – Felicity Duncan
By Michael Wursthorn and Sam Goldfarb
(The Wall Street Journal) Yields on long-term U.S. government debt moved abruptly higher last week, calling into question the durability of the more than nine-year-old bull market for stocks.
___STEADY_PAYWALL___