LPL Financial Says S&P 500 Often Weakens After First Fed Rate Hike

After U.S. August core CPI inflation heated up again, expectations for a September Federal Reserve rate hike rose quickly. According to Odaily, market attention has shifted to how U.S. stocks may perform after the hike. LPL Financial Chief Equity Strategist Jeff Buchbinder reviewed six Fed tightening cycles since 1994 and found that the S&P 500 has typically been weak in the short term after the first rate hike, but performed much better one year later. LPL said the current U.S. economic backdrop differs significantly from 2022 and is closer to the late 1990s, though it does not mean a repeat of 1997. The firm had previously expected that even if the Fed continues tightening, the overall scale would be unlikely to match the 2022-2023 cycle, when the central bank raised rates by 5.25 percentage points through 21 consecutive 25-basis-point hikes.