A Fed Day Like Most Others

Yesterday’s Fed decision and comments from Fed Chair Powell gave markets plenty to chew on. There have been a number of conflicting statements from officials and confusing reactions in various assets over the past 24 hours. In spite of all that uncertainty, the S&P 500’s path yesterday pretty much followed the usual script. In the charts below we show the S&P’s average intraday pattern across all Fed days since Powell has been chair (first chart) and the intraday chart of the S&P yesterday (second chart). As shown, the market’s pattern yesterday, especially after the 2 PM ET rate decision and the 2:30 PM press conference, closely resembled the average path that the market has followed across all Powell Fed Days since 2018.

The S&P saw a modest bounce after the 2 PM Fed decision and then a further rally right after Powell’s presser began at 2:30 PM. That initial post-presser spike proved to be a pump-fake, as markets ultimately sold off hard with a near 2% decline from 2:30 PM to the 4 PM close.

So what typically happens in the week after Fed days? Since 1994 when the Fed began announcing policy decisions on the same day as its meeting, the S&P has averaged a decline of 10 basis points over the next week. During the current tightening cycle that began about a year ago, market performance in the week after Fed days has been even worse with the S&P averaging a decline of 0.99%. However, when the S&P has been down over 1% on Fed days (like yesterday), performance over the next week has been positive with an average gain of 0.64%.  As always, past performance is no guarantee of future results.

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Disclaimer: Bespoke Investment Group, LLC believes all information contained in this report to be accurate, but we do not guarantee its accuracy. None of the information in this report or any ...

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