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Release: June 30, 1999


Interest rate increase and stock markets

Reporters and editors looking for commentary on the Fed’s discussion of raising the interest rate and the consequent impact on U.S. stock markets may contact the following University of Iowa expert:

Anand Vijh, associate professor of finance, can be reached at (319) 335-0921.

Vijh says an interest rate hike has already been built into recent stock prices and there will be little immediate impact on markets.

"But if there is a subsequent increase in rates, stock prices will go down," Vijh said. He added that investors will be looking at corporate earnings reports in coming weeks.

"Next quarter's earnings could be better than investors are expecting. Normally, this time is called 'confession season' when companies express low earnings, but this season could be a good one. However, some stocks are also priced at high levels," Vijh said.