Fed Pause Good For Stocks? Think Again.

by: TickerSense

The prospect of the Fed nearing an end to its tightening cycle seems like a plausible reason for Tuesday's 200 point rally in the Dow - right?

In our newly released study, The Inverted Yield Curve ~ The End of The Cycle, we analyzed prior Fed rate tightening cycles since 1962. Among our findings was that in the period spanning the Fed's last rate hike to its first cut (average span of six months), the market has an average decline of nearly 7%, and has only risen during two of the nine periods. In the chart below, we created a composite chart of the S&P 500's performance during the 'limbo' period of Fed tightening cycles.