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Why Are Financial Stocks Falling when Rising Rates Should Help?

Direxion of Direxion
Why Are Financial Stocks Falling when Rising Rates Should Help?

Financial stocks are often spotlighted as major beneficiaries of rate increases, but this is a misconception. Gradual rate hikes over long periods are, in fact, good for banks. Because while rising rates mean banks can charge more for loans, they have an adverse effect on the price of fixed-income securities like bonds, which make up the bulk of banks’ assets.