Dow Jones Declines As Investors Brace For Fed Decision

The Federal Reserve has been in the midst of quite a few investment discussions; and for good reason. For the past 6 years, we’ve been living in times of 0% interest rates. That’s unheard of, but good for investors. However, since late 2014, the Federal Reserve has been saying that they intend on increasing interest rates in the year 2015. Well, 2015 is almost over and we haven’t seen a rate hike quite yet. Nonetheless, the Federal Reserve will be meeting September 15th and 16thto discuss rates once again. This time, many believe that the result will be a hike before the end of the month. Today, we’ll talk about how the discussion is affecting activity in the market, the pros and cons the Fed will need to weigh in their discussions, and what we can expect to see in either case.

How The Possible Rate Hike Is Affecting Market Activity

On Monday, markets were down as investors braced for the impact of higher interest rates. That’s because if the Federal Reserve does increase interest rates, the market is in for even more declines. The reality is that low interest rates put more money back into the pockets of consumers. Therefore, consumers are able to spend more; boosting up corporations and leading to higher stock values. However, if a rate hike does happen, investors will have less money to spend; which could lead to lower sales volume for many publicly traded companies and ultimately bring the value of stocks down. So, what we saw in the market on Friday is a direct reaction to the idea that the Fed may actually raise rates before September ends. With that said, here’s how the market reacted on Monday…