Investopedia reported on September 15 that U.S. stocks have often struggled in the first months after the Federal Reserve begins raising rates. According to PANews, LPL Financial Chief Equity Strategist Jeff Buchbinder reviewed six Fed tightening cycles since 1994 and found that the S&P 500 typically weakened shortly after the first rate hike, while performance one year later was much stronger than in the initial months.
LPL said the average return was lifted by an especially strong move after the March 1997 rate hike, when the S&P 500 rose 42% over the following year. The firm said the current macro backdrop is different from 2022 and is closer to the late 1990s, with the economy still growing and a new cycle of technology investment forming.
LPL Financial said the current AI investment boom may support corporate capital spending and the technology sector for a period of time, partly offsetting the pressure that higher rates place on stock valuations.