Kensho Stats

History shows rising yields should help stocks

Interest rates percentage sign
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The stock market fell big time Tuesday as Treasury yields jumped, but investors may be getting it wrong as recent history shows rising rates typically help the stock market.

Using Kensho, CNBC PRO sought to find what might happen if the yield on the 10-year, currently at about 1.75 percent, continues to climb and rises above 2 percent in the next month. The 10-year yield moved higher by 25 basis points in one month on 44 occasions over the last decade, according to Kensho.

During those one-month periods, the S&P 500, on average, was up 1.9 percent and traded positively 80 percent of the time. The sector ETFs that are the most-linked to a faster economy led the advance.

Some will say Tuesday's move is how it's supposed to work. In general, during the long-term bullish period starting in the early 1980s, stocks rose as bond yields declined and vice versa.

Perhaps, but a continued stock market decline in the face of these rising yields would go against recent market history.

Disclosure: NBCUniversal, parent of CNBC, is a minority investor in Kensho.