With interest rates in the headlines again, you might wonder: “Why does the market care so much?” or “What does this mean for my portfolio?”
Let’s unpack it—without the Wall Street jargon.
When the Federal Reserve signals a change in interest rates, the market doesn’t wait around. It reacts almost immediately, often weeks or months before anything happens. In fact, just last week, hints of a potential rate cut in September 2025 pushed some stocks up more than 5%, while others had more modest gains.
But this isn’t about predicting daily market moves. The real conversation—the one I have with clients and friends—is about understanding why you own what you own in the first place. We invest in businesses, not just tickers on a screen. The fundamentals of a company matter more than any single news cycle.
That said, interest rates do play a role. Lower rates can make borrowing cheaper and growth easier, which often benefits companies—and their stock prices. But it's not a one-way street. Different sectors respond differently, and timing the market based on headlines is nearly impossible.
So, what should you do with this information? Stay focused on your plan. Understand what you own and why. And remember markets are forward-looking. By the time a rate cut happens, much of the reaction may already be priced in.
If you’re unsure how interest rate shifts might affect your specific situation—especially if you’re preparing for a business sale or other big transition—I’m happy to talk through it with you.
P.S. - Here are a few things I am reading/watching/listening to: