From Yahoo Finance · · 1m 30s
Rate hikes hurt stocks briefly, then they bounce back
Historical data shows the S&P 500 typically recovers from Fed rate hike losses within weeks, then posts solid gains over the following year.
In brief
Historical data shows the S&P 500 typically recovers from Fed rate hike losses within weeks, then posts solid gains over the following year. Stock market dips following Fed rate hikes have historically been short-lived buying opportunities, with the S&P 500 averaging 9% gains over the next 12 months. Originally…
Markets brace for Fed hike
Wall Street expects the Federal Reserve to raise interest rates today for the first time since July 2023. Markets are pricing in a 25 basis point increase.
Initial drop averages 4%
The S&P 500 has fallen an average of 4% in the six weeks after the first Fed rate hike across seven cycles since 1988.
Recovery happens fast
Stocks have recovered all those losses over the next five to six weeks on average. The pattern has held across multiple rate hike cycles.
Six month gains turn positive
The S&P 500 has returned an average of 4% in the six months following the first rate hike. Longer term results look even better.
One year returns average 9%
After 12 months, the S&P 500 has gained 9% on average. Every episode except 2022 posted positive returns over that timeframe.
“Fed rate hikes have historically been great buying opportunities”
Sticky inflation forces action
Rising CPI, PPI, and energy costs are pushing the Fed back into tightening mode. Investors are watching the dot plot for clues about future moves.
The headline
Stock market dips following Fed rate hikes have historically been short-lived buying opportunities, with the S&P 500 averaging 9% gains over the next 12 months.
