The Fed raises interest rates when the FOMC consensus is that inflation is a greater concern than further economic slow-down. Thus, once the FOMC concludes the economic recovery is well on its way, rate increases become more likely. This is not likely to happen for a few more weeks or months at least, in my opinion. With unemployment as high as it is, consumer spending is not exhibiting any irrational exuberance, which helps keep prices in check, reducing the likelihood of inflation heating up soon.

As for the stock market, it usually prices in expectations of rate increases, inflation/deflation, etc. This does not mean the expectations end up materializing, at least on the expected time-table, but it means that stock prices usually already include everything that the market expects is likely to happen in the near term future.

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