interesting data on the performance of S&P 500, 6 months before the FED raises interest rate...

Sam Stovall, S&P Capital IQ’s U.S. equity strategist, recently tracked Fed interest rate hikes going back to the end of World War II.

“In 13 of the 16 times the Fed raised rates, the market went into a pullback, correction or bear market” in the six months before the rate hikes began, he told me in a phone interview last week.

In the years since 1946, Stovall found six pullbacks (a 5% to 10% decline), four corrections (when stocks fell from 10% to 20%) and three bear markets (a drop of 20% or more) began in the six months before the Fed started tightening. He used the S&P 500 Index for his research.

The S&P 500 lost 16% of its value, on average, during those declines, but it fell slightly less in the six months after rate hikes began.

“We had pullbacks, corrections and bear markets start more often in the six months before [a rate increase] than the six months after,” he told me.

Altogether, Stovall wrote last week, “88% of the time, the markets were thrown into a pullback or worse when an initial rate hike was a possibility or reality.” That means “a very high likelihood that the S&P 500 will begin a decline of 5% or more within six months” of the Fed’s first hike.

http://www.marketwatch.com/story/heres-wha...14-09-24?page=1