The Federal Reserve raised interest rates by 25 basis points to 3.75%-4%, marking the start of a new tightening cycle. While rate hikes historically trigger initial stock market pulldowns, historical data shows the S&P 500 averaged 6.7% returns in the 12 months following initial rate hikes. The current cycle is expected to be mild compared to 2022, with the AI supercycle and post-midterm election period potentially supporting market performance. Investors are advised to stick to dollar-cost averaging strategies rather than attempting market timing.
Axe note: Fed rate hikes often rattle markets but local opportunities still emerge; careful selection is key.