NEW YORK : Fears over the Federal Reserve's hawkish shift have combined with geopolitical uncertainty to push the S&P 500 into a correction this year, yet historical data suggests tighter monetary policy has often been accompanied by solid gains in stocks.
An analysis of 12 rate hike cycles overall by Truist Advisory Services found the S&P 500's posted a total return at an average annualized rate of 9.4per cent during the length of such cycles, showing positive returns in 11 of those periods. Many investors worry that this year may be more complicated than most, however, as markets are faced with soaring inflation which stands to be worsened by surging commodity prices in the wake of Russia's war with Ukraine.
But the benchmark index was higher six months into the cycle by an average of 3per cent, and 5per cent higher on average after 12 months, according to Evercore. Title: Stock performance as the Fed starts to hike, https://graphics.reuters.com/USA-STOCKS/FED/klpykbwkjpg/chart.png Title: Growth underperforms value, https://fingfx.thomsonreuters.com/gfx/mkt/zgpomzgjmpd/Pastedper cent20imageper cent201647373431666.png