The S&P 500’s track record after the first Fed rate hike of a cycle

The Kobeissi Letter describes an initial dip followed by recovery across seven Fed tightening cycles since 1988. It says the S&P 500 declined 4% on average in the six weeks after the first hike, then recovered all those losses over the next five to six weeks on average. Its figures show average returns of 4% six months after the first hike and 9% after 12 months, with positive 12-month returns in every episode except 2022. The letter argues that Fed rate hikes have historically been buying opportunities.