Lower interest rates mean businesses can borrow money cheaply to expand, add employees, conduct R&D for new products....etc
When the investors believe businesses are growing they purchase more shares of their stock.
This causes the stock prices to rise.
Another component to lower interest rates is people are more likely to take out home loans or refinance their existing home loan and used the savings to purchase items from companies which is the engine of the economy.
On the other hand when interest rates are high people are reluctant to borrow money and in fact there is more of an incentive to save money.
Right now people who save money would kill to get a 5% return on bank CDs! When a large segment of the populations elects to save money rather than spend it there is usually a recession soon afterwards. Sometimes people choose to save money when they hear about numerous layoffs because they fear losing their own jobs. Less money being spent in the economy makes stocks crash. Low interest rates spurs spending which stimulates the economy. Now is a great time to buy a home or new car!
by ngureco 3 years ago
Which Are The Best Trading Strategies In The Stock Market?
by HarshitG 5 years ago
Hey,As many would be aware of that stock market is one of better way to invest and reap benefits from . So what i want to know is do you guys really invest in Stock market or stick with Fixed deposits and bank interest ratesHarshit
by breathe2travel 6 years ago
Why is the media coverage of economy consistently negative?After 9/11, the stock market plummeted. However, a less known reality is that 59 days later, on 11/9, the stock market had returned to its pre-9/11 status. Why was that not heralded? Why is the media consistently negative...
by ngureco 9 years ago
Regarding the current long range downtrend of the stock market, I am one person who does not buy into Elliott Wave Theorists' apocalyptic views of the market. Their views and analysis of the markets may not make sense. Never, never.One such Elliott Wave Theorists is Robert Prechter Jr. In his...
by donrock 9 years ago
Yesterday Oblama signed the stimulus package and by the time the stock market closed the Dow was down almost 300 points.. Today he spoke about the mortgage bailout. When he started the Dow was positive and now is down 30 points the last time I checked. I guess it's not convincing a lot of investors...
by Kartik ahir 5 years ago
Y do people say that investing money in stock market is similar to gambling?
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