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The Federal Reserve raised interest rates at its mid-September meeting, a move that has historically preceded short-term stock market declines.
While the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average have held steady in the immediate aftermath, market history indicates that the last two September rate hikes were followed by drops within weeks.
The 2018 cycle offers a clear precedent for temporary volatility. The S&P 500 and the Dow set new record highs on September 20, 2018, six days before the Federal Reserve increased rates.
Following that hike, the S&P 500 fell 19.1% until its low point just before Christmas. The Fed raised rates again on December 19, 2018, five days before that low was reached.
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