Concept

Interest rates

The price of borrowing money, shown as a yearly percentage of the amount borrowed. Savers earn it and borrowers pay it; the Federal Reserve’s decisions push short-term rates up or down.

Why we track it

Rates change what future profits are worth today, so rising rates tend to weigh on stock prices, especially for companies whose profits are far in the future.

Asset allocationHow a portfolio is split among kinds of investments, such as stocks, bonds and cash.
BacktestingTesting an investing rule on historical data to see how it would have performed before putting money behind it.
Basis pointOne hundredth of a percentage point (0.01%), often written bp.
Bear marketA fall of roughly 20% or more from a recent peak, usually over several months.
Bull marketA long stretch of rising prices across a market, often dated from a 20% rise off a low.
Business cycle stagesThe economy’s long rise and fall: years of growth, a slowdown, sometimes a recession, then recovery.

Why we track it

Related terms