Fastest Four: Which Sectors Led After the Last 6 Fed Rate Hike Cycles?
The Get Ready For The Future Show
Which stock sectors have historically done best after the Fed starts raising rates, and which ones have lagged? The Fed raised rates on September 16, its first hike since July 2023, and markets now expect four more increases over the next 12 months, according to LPL Research.
So how have stocks handled a rate hike cycle in the past?
- The first four months are often rough, but the S&P 500 was positive 12 months after the first hike in 5 of the last 6 cycles since 1994. 2022 was the exception.
- Tech has led on average: +13% after 6 months and +21% after 12.
- Energy (+10% / +19%) and utilities (+6% / +15%) have also held up.
- Financials (under 1% / 9.5%) and consumer discretionary have trailed the index, though their returns were still positive on average.
Not every sector moves together, which is why your mix matters as rates rise.
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