Stocks One Year After the Fed Started Hiking

The Federal Reserve raised interest rates last week for the first time since 2023.

The natural assumption is that higher rates are bad for stocks, given how 2022 went.

The chart below follows the S&P 500 for one year after the first hike of every completed Fed tightening cycle since 1983.

In six of the seven cycles, stocks were higher one year later. The median gain was 4.4%. The new 2026 cycle is up 1.6% through September 24th.

The Fed described the economy as expanding at a solid pace, with resilient spending, strong productivity and robust capital investment. Those same conditions support growing corporate earnings while higher borrowing costs work through the economy.

What matters from here is why the Fed is hiking, and whether economic growth can absorb the higher cost of money.

Until next week,
Jacob