On average, the S & P 500 is usually up 2% 65 days before the first cut from the central bank following a hiking cycle, according to data from Strategas.
But it's usually down by 1.5% 65 days after that initial rate reduction, implying that stocks may not be off to the races after the big announcement.
In 1974, for example, the S & P 500 was down more than 8% in the 65 days prior and off by more than 25% in the same period following the cut.
But in 1989, the broad index was up more than 12% in the 65 days preceding the rate reduction and still higher by more than 9% in the period after.
Fed funds futures indicate a chance of at least one rate cut as early as September, with the potential for a second at the last meeting of the year in December, according to CMEGroup's FedWatch tool .
Persons:
Ryan Grabinski, Chris Zaccarelli, Grabinski
Organizations:
Federal Reserve, Fed, Independent