Why are stocks climbing with rising yields and Fed tightening?

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An interesting dynamic has been playing out in the market over the past week. Treasury yields have skyrocketed as the Fed signaled it would raise rates more aggressively than previously projected, which would typically be a drag on stocks. Tightening cycles have also traditionally spooked equity investors (at least in the short-term) with the risk of looming recession on tap, but the opposite seems to be happening. What's going on?

Preemptive strike: "Maybe investors are feeling that with the Fed taking more of a proactive approach early on it won't have to slam on the brakes later," said Sam Stovall, chief investment strategist at CFRA.

The whole picture: "The message that came out of the [Fed] meeting last week is that they are going to be tightening [monetary policy] but the U.S. economy is resilient enough to withstand that," explained Huw Roberts, head of analytics at Quant Insight. "The equity market chose to emphasize the economic resilience portion."

Inflation slayer (Part 2): "Faster hikes are clearly going to help inflation come down and may reduce the need for a longer tightening campaign," noted Seema Shah, chief strategist at Principal Global Investors. "We are positive for equities for this year."

Buy the dip: "You're beginning to see a little bit of the revenge of growth stocks," said Wayne Wilbanks, chief investment officer of Wilbanks Smith & Thomas Asset Management. "Prices have collapsed, so valuations have gotten much better, to the point where that outweighs interest-rate concerns."

Some caution: "If I'm investing over the next 12-month horizon, I would reduce equities at this point. I would take some money off the table," pointed out Mohamed El-Erian, chief economic advisor at Allianz. "I don’t think the market has factored in yet what's going to happen to the economy."

Alarm bells: "One thing I did learn many years ago you don't fight the Fed," declared billionaire activist investor Carl Icahn. "I have kept everything hedged for the last few years. I think there very well could be a recession or even worse, and the market can be in for a rough landing."