Stocks can do well when the Fed raises rates

Equity markets were mixed in May, with the US and Japan in positive territory, while EM and Europe gave back some recent gains. 

Fed is likely to begin raising rates in September, and to move slowly compared to other tightening cycles. BofA Merrill Lynch Chief North American Economist Ethan Harris expects the federal funds rate, now close to zero, to be 1.5-1.75% at the end of 2016.

"Higher rates are not necessarily a negative for stocks. Years of debt restructuring and a wide gap between current dividend yields and bond yields suggest that even higher yielding equities may weather increases in rates better now than in prior tightening cycles." says BofA Merrill Lynch