The Federal reserve is planning to raise interest rates either in a few weeks time in September or possibly December. Either way, interest rates are expected to begin to rise before the end of 2015. Over the past year, we have been looking into the effect of rising interest rates on stock market valuations.
We looked at long term market valuations for the S&P 500 index. The bottom line is that while stock market valuations are primarily determined by corporate earnings, interest rates can push earning multiples up or down. Moving from near zero rates upwards, price to earnings ratios can be expected to move down by roughly one multiple per interest rate percentage point raise.
We have published a summary of some of the things we've learned here: http://seekingalpha.com/article/3476816-how-the-upcoming-fed-interest-rate-hike-will-move-stock-prices-what-you-need-to-know