A Century of Data Show Markets Far From Impervious to Tax Hikes
- Higher corporate, individual rates have dented returns: BTIG
- JPMorgan warns of declines for beneficiaries of 2017 cuts
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The prospect of tax hikes may not have derailed gains in U.S. stocks yet, but 100 years of data say the market is far from impervious to them.
Stocks can take a hit when rates rise on corporations and individuals, according to Julian Emanuel, chief equity and derivatives strategist at BTIG LLC. He sees 13 such instances, most recently in 1993. The average return on the U.S. benchmark index in the years of the combined hikes is 2.4%, and drops to -0.9% for the year following. That compares with a long-run annual average of 7.7%, Emanuel notes.