Economics
Fed Tightening Peak or Pause? For Stock Bulls, A Critical Issue
- Two scenarios have strong implications for market performance
- SocGen sees tightening peak, Bloomberg Economics calls a pause
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Deciphering whether the Federal Reserve is pausing rate hikes or calling them off completely is a trillion-dollar question for equity investors, history shows.
First, a scenario in which the break is just a breather -- say, five months between increases. On average, the S&P 500 slips by about half a percentage point in the month right after the final bump, according to Ned Davis Research. Then the performance typically flips to a gain of about 1 percent both three and six months out, the firm found.