As the Fed gradually withdrew its loose monetary policy support during the epidemic, the days of "easy money" for US stocks are over. Benchmark interest rates are rising, and bond yields, which have been fixed at historically low levels, are destined to rise at the same time.

One of the biggest concerns for the market now is how many interest rate hikes the FOMC will implement in 2022. Jamie Dimon, chief executive of JPMorgan Chase & Co, hinted that the Fed could even raise interest rates seven times this year, while the market is widely expected to raise interest rates three times in the coming months.

The yield on 10-year Treasuries closed at 1.791% on Friday, meaning yields have climbed by about 26 basis points in the first 10 trading days of the calendar year, the fastest rise since 1992. Thirty years ago, 10-year Treasuries rose 32 basis points to about 7 per cent at the start of the year.

But will higher interest rates drive the stock market weaker? As it turns out, in the so-called rate hike cycle, markets tend to perform strongly rather than poorly.

In fact, since 1989, during the period when the Fed raised interest rates, the average return of the Dow Jones Industrial average is close to 55%, the return of the S & P 500 is 62.9%, and the average positive return of the NASDAQ composite index is 102.7%. The fed also produces strong gains during interest rate cuts, with the Dow up 23% on average, the s & p 500 up 21% and the NASDAQ up 32%.

Interest rate cuts tend to occur during periods of economic weakness, while interest rate increases are seen to some extent as overheating, which may be the reason for the disparity in the performance of the stock market during interest rate cuts.

To be sure, when the economy experienced 1970s-style inflation, it was harder to see the market produce excess performance. Now, based on stock movements so far in 2022, many investors are unlikely to get double-digit returns this year. The Dow is down 1.2%, the s & p 500 is down 2.2%, and the NASDAQ is down 4.8% so far this year.

The sector that has made excess gains so far this year has been in the energy sector, with the S & P 500 energy sector up 16.4% so far in 2022, while the financial sector is up 4.5%. Nine other sectors of the S & P 500 were flat or lower. At the same time, the value sector is rebounding more significantly, with the iShares S & P 500 value ETF returning 1.2 per cent so far this month.

So far, growing stocks are taking a hit as bond yields rise, as the rapid rise in yields reduces the value of their future cash flow. Higher interest rates are also hampering the ability of technology companies to fund share buybacks. Biotech stocks have been hit, with iShares Biotech ETF down 9 per cent so far this month.

Casey Wood's flagship fund, ARK Innovation ETF (ARKK), fell nearly 5 per cent last week and 15.2 per cent in the first two weeks of January. Stocks that rose sharply in the early days of the epidemic were also hit, with GameStop down 17% last week and more than 21% in January, while AMC fell nearly 11% last week and more than 24% so far this month.