# 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.
- Title: Rate hikes hurt stocks briefly, then they bounce back
- Summary: 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…
- Keywords: federal reserve, interest rate hikes, s&p 500, stock market, the kobeissi letter, kevin warsh, inflation, dot plot, deutsche bank, jim reid, monetary policy, business
- Source: Yahoo Finance — https://finance.yahoo.com/economy/article/federal-reserve-interest-rate-hikes-usually-pound-stocks-but-then-something-surprising-happens-100449563.html
- Published: 2026-09-16T10:04:49+00:00
- Read time: 1 min
- Topics: federal reserve, interest rate hikes, s&p 500, stock market, the kobeissi letter, kevin warsh, inflation, dot plot, deutsche bank, jim reid, monetary policy, business
## 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.
## Key takeaway

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.