First, the impact of policy interest rate on the stock market.
Fed's interest rate hike means that the policy interest rate will rise, which will bring a series of effects to the stock market. On the one hand, the increase of policy interest rate will slow down the speed of economic development, lead to the decline of corporate profitability, and then lead to the decline of stock prices. On the other hand, if raising interest rates means increasing inflation, it will aggravate the volatility of the stock market. Generally speaking, the impact of interest rate hikes on the stock market is more negative.
Second, the reaction of different industries.
Although the impact of the Fed's interest rate hike on the entire stock market is generally negative, the reactions of different industries may be different. In some industries, because of fierce competition, corporate profits are not high, and the increase in policy interest rates may have little impact on them. On the other hand, some industries have relatively high profits because the market competition is not fierce, and the rise of policy interest rates will have a negative impact on them. Therefore, investors need to have a deep understanding of different industries when making decisions.
Third, choose relatively stable stocks.
Although the rise of policy interest rate has a great influence on the stock market, the price fluctuation of some stocks is relatively small, and these stocks are relatively stable in the market. For those investors who don't want to take risks, choosing these stocks is a good choice. These stocks are usually large companies or enterprises with relatively stable performance, which can often resist market risks.
Fourth, the investment targets are diversified.
When investors choose stocks to invest, they should choose different stocks as investment targets as far as possible, thus reducing market risks. Investors should choose stocks with different industries, different capital scales and different historical trends as investment targets to diversify their investments.
To sum up, the Fed's interest rate hike has a great impact on the stock market. Although the rise of policy interest rate will bring many negative effects, investors can choose relatively stable stocks as investment targets by studying the situation of different industries, so as to realize diversification of investment, thus reducing market risks and maximizing investment value.