The US stock market is likely to weather further interest rate increases, provided the Federal Reserve's tightening path remains measured, according to analysis from RBC Capital Markets.

Lori Calvasina, Head of US Equity Strategy at Royal Bank of Canada's (RBC) capital markets division, indicated that the market can absorb moderate policy adjustments.

Market Resilience to Policy Moves

Calvasina expressed that the equity market appears capable of handling a controlled pace of tightening. "Assuming we see about two 25-basis-point hikes over the next 12 months, I think the market will ultimately be fine. The market seems to be able to withstand anything that's done in moderation," she stated.

Recent Market Context and Performance

This perspective comes after the Federal Reserve's policy meeting last week delivered a more hawkish message than some traders anticipated, with new Chair Kevin Warsh emphasizing an intolerance for high inflation.

Despite this, US stocks managed to secure gains for a second consecutive week, marking their 11th weekly advance in the past 12 weeks. The S&P 500 index has rallied 18% since hitting its low for the year on March 30th.