High Rates May Not End the US Stock Bull Market
High interest rates are not necessarily the main threat to the US stock bull market, according to a 14 September JPMorgan report. The key factor is whether corporate earnings growth can justify current valuations.
The 10-year US Treasury yield has an estimated valuation pressure threshold of around 5% to 6% under current earnings conditions. When earnings growth is strong, moderate yield increases may initially support rather than reduce equity valuations. S&P 500 companies are valued at about 22 times projected 2026 earnings, with implied earnings growth of roughly 28%. The 2027 valuation is about 18 times earnings, implying growth of approximately 21%.
JPMorgan said valuations could remain supported if earnings growth stays above 13% to 15%. Productivity growth of 1.5% to 2.5%, potentially strengthened by artificial intelligence, could provide an additional buffer.
Higher rates are expected to create greater differences between sectors rather than damage all companies equally. Firms with fixed-rate, long-term debt and strong cash balances are better protected, while highly leveraged companies, smaller businesses, real estate, housing and rate-sensitive consumer sectors face greater pressure. A bear-steepening yield curve could favour energy and financial stocks, while a bear-flattening curve may support technology shares.
Goldman Sachs, Morgan Stanley and JPMorgan strategists do not view limited rate hikes as an automatic end to the bull market. However, a renewed inflation surge and expectations for four to five additional hikes could shift investor demand towards low-volatility stocks.
Neutral
The market impact is neutral for cryptocurrencies because the report presents both supportive and restrictive forces. On one hand, it argues that high interest rates may not immediately end the US equity bull market if earnings remain strong. This could support broader risk appetite and reduce the likelihood of an abrupt risk-off move across equities, crypto and other growth assets. Strong AI-related earnings and productivity expectations may also sustain demand for high-beta technology themes.
On the other hand, Treasury yields near the 5% to 6% valuation threshold would keep financial conditions tight. If inflation accelerates and traders price in four to five additional Federal Reserve hikes, real yields and the US dollar could rise. Historically, this combination has pressured Bitcoin and other cryptocurrencies by reducing liquidity and increasing the attractiveness of cash and government bonds. Smaller companies and highly leveraged sectors would likely weaken first, potentially spreading volatility to digital assets.
In the short term, crypto traders should monitor the 10-year Treasury yield, Federal Reserve rate expectations, the US dollar index and equity volatility. A stable yield curve and resilient earnings could support a relief rally in BTC and major altcoins, while a decisive move above the reported yield threshold could trigger deleveraging. Over the longer term, sustained productivity growth and strong corporate earnings would favour risk assets, but persistent restrictive monetary policy would remain a structural headwind. Unlike a direct crypto catalyst, this report is primarily a macro signal, so its net effect is best classified as neutral.