When will rising interest rates be a real problem for the stock market?

Nobody has the answer to that question, although a lot of people are venturing guesses now that rates are climbing steadily. The problem with those guesses is that a complex combination of factors is at work.

The stock market suffered sizeable declines last Thursday and Friday, but the Dow Jones bounced nearly 40 points higher on Monday.

Rising interest rates were to blame for the losses, as were problems in some foreign markets and financial crises in Italy and elsewhere.

But the sharp rise in borrowing costs in this country, where some rates have risen by 25 basis points — or one quarter of a percentage point — in just days is the main concern.

As the old Wall Street saying goes, “Don’t fight the Federal Reserve.” And the Fed right now is pushing rates higher in a move that should slow down the economy.

Those higher rates also make investments in bonds and money market accounts slightly more attractive in comparison with the stock market, which has been doling out riches for a decade.

What are those other factors that need to be known when guessing the effects of rising rates?

First, nobody knows how high interest rates will go. But you don’t even have to read between the lines of recent statements by Fed Chairman Jerome Powell to come to the conclusion that he wants rates up by a lot more.

“The really extremely accommodative low interest rates that we needed when the economy was quite weak — we don’t need those anymore. They’re not appropriate anymore,” Powell said last week.

Then, Powell delivered the zinger when he said rates were “a long way from neutral at this point.” Meaning: Low rates are still pumping high-octane gas into the economy even when businesses don’t need the accelerant.

The added zinger was Powell saying that the Fed may even go “past neutral” while getting rates back to normal for what this economy deserves.

In other words, the Fed may err in causing rates to rise to a point where they slow down the economy more than they wish.

You might also conclude that Powell means that the Fed will go past neutral on purpose, although he didn’t make that clear.

Powell’s words and actions are also setting the Fed up for a political confrontation with the White House since President Trump has already taken the rare step of criticizing his Federal Reserve chairman.

The financial markets reacted violently to Powell’s statement, but the bond market declined even more than stocks. The yield on the US government’s 10-year note was at 3.23 percent as of Monday morning.

A week ago, it was below 3 percent. In case you didn’t already know, bond prices move in the opposite direction of interest rates. So, with the Fed and the financial markets continuing to push rates higher, bond investors will be more vulnerable than people with money in the stock market.

(Check the funds you are invested in. You might be in for a bad surprise if you have money in funds that invest in bonds.)

Another issue with interest rates and the equity market is the fact that investors have been conditioned to think stocks will always rebound.

So there is a feeling — justified in recent times — that you should keep your money in the stock market no matter what.

After all, having your investments potentially locked up in government securities of 3 percent or more for 10 years won’t be seen as attractive by many who have experienced the bull market in stocks over the last decade.

So it might take considerably higher rates before investors retreat from any stock market problem that might develop into the relative safety of bonds.

Why is the Fed raising interest rates?

Simple, it’s worried about inflation. And it is especially worried because of the tax cuts enacted by Congress and Trump last year that are creating a stronger economy. And the Fed may be the only place where the massive increase in debt is seen as a problem.

As I’ve said before, that concern is more than justified.

The federal debt increased by more than $1.2 trillion between last month and September 2017. Despite the fact that tax revenue coming into the US Treasury is up because of the improved economy, the deficit now stands at $21.6 trillion.

Trump’s displeasure with the Fed will probably only make Powell harden his stance.

The Federal Reserve is powerless unless it is considered independent of political pressure.

Last Friday’s jobs report for September was lackluster. But sharp upward revisions to previous months showed that the Fed, as I mentioned in previous columns, is worried that it is not getting a good picture of what the economy is really doing.

And Powell will probably want to err on the side of caution — the side of higher and higher interest rates.