I'm LongbridgeAI, I can summarize articles.Ryan Detrick notes S&P 500 yields muted returns (median 5.6% annualized) during post-WWII Fed cycles with 5+ rate hikes, though positive in 72.7% of cases. LPL Research adds stocks often gain 10.7% over 12 months post-hike unless recession risks rise. With a 92.5% probability of a September hike, economists are divided: Zandi warns of policy mistakes, while Ryan anticipates a single move. Markets are up YTD, but ETFs dipped recently.
The S&P 500 has historically posted more muted returns during Federal Reserve tightening cycles that featured five or more rate hikes, according to historical market data shared by Carson Group Chief Market Strategist Ryan Detrick.
Historical Data Reveals Muted S&P 500 Performance
Detrick identified 12 post-World War II tightening cycles in which the Fed raised rates at least five times.
While the S&P 500 index was “usually higher” during these periods—achieving positive total returns in 72.7% of cycles—” muted returns were common,” resulting in a median annualized return of 5.6%.
Since WWII, there have been 12 cycles that saw the Fed hike at least five times.
— Ryan Detrick, CMT (@RyanDetrick) September 16, 2026
Stocks were usually higher during the hiking cycle, but muted returns were common.
Assuming they start hiking tomorrow, the bigger questions is how many more hikes could be around the corner? pic.twitter.com/i3Q8RSkR1j
Read Also: Fed’s Waller Favors Holding Rates in September — Unless August Inflation Runs Hot
Wall Street Research Corroborates Market Resilience
Data from LPL Research supports the trend of market durability during monetary tightening. Analyzing six Fed tightening cycles since 1994, LPL strategists observed that while stocks often experience initial turbulence over the first four months, the S&P 500 achieved a median 12-month gain of 10.7% following an initial rate increase.
LPL said rate hikes alone “do not typically derail bull markets” unless accompanied by rising recession risks.
Fed Decision Backdrop and Economic Debate
The historical analysis arrives as the CME FedWatch tool is pricing in about 92.5% probability of a 25-basis-point rate hike at Wednesday’s Federal Open Market Committee meeting, which would lift the benchmark target range to 3.75%–4.00%.
Wall Street economists remain divided on whether the move signals an extended cycle. Moody’s Economist Mark Zandi warned that “the odds of a serious Fed policy mistake are uncomfortably high and rising,” cautioning that aggressive policy moves could trigger a “self-reinforcing” economic downturn.
Conversely, Ebury Head of Market Strategy Matthew Ryan told Benzinga that he expects a “one and done” hike, anticipating Fed Chair Kevin Warsh will leave the committee’s next move “deliberately unclear.”
Meanwhile, Trade Nation Senior Market Analyst David Morrison also told Benzinga that 10-year Treasury yields surging above 5% reflect market repricing amid sticky inflation and substantial government debt issuance.
How Have Stock Markets Performed in 2026?
The S&P 500 index has advanced 10.60% year-to-date. Similarly, the Nasdaq Composite index was up 11.82%, and the Dow Jones gained 7.67% YTD.
On Tuesday, the SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 and Nasdaq-100, respectively, closed lower. SPY fell 0.46% to $757.39, while QQQ fell 0.65% to $704.54. Meanwhile, the Dow tracker, State Street SPDR Dow Jones Industrial Average ETF Trust (NYSE:DIA), also ended 0.62% lower at $521.23.
Read Also: Trump Says Rate Hikes 'Keep A Country Down,' But Prediction Markets Say His Own Fed Chair Has Teed One Up
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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