What If You Bought the S&P 500 at the Start of Every Fed Rate Hike?
On September 16, 2026, the Federal Reserve raised interest rates for the first time in years. The reflex, every time, is the same: the Fed is tightening, so stocks must be about to fall. It is worth checking that reflex against the record, because we can. This site holds monthly S&P 500 prices going back to 1993, which covers the last five times the Fed started a rate-hiking cycle.
So we ran the unfashionable trade: buy the S&P 500 the month the Fed delivered the first hike of a cycle, and hold. Here is what actually happened, cycle by cycle.
The Year After the First Hike
The first question is the one the reflex is really about: did stocks fall in the twelve months after the Fed started hiking? Mostly, no.
| Cycle began | What it was | S&P 500, 12 months later |
|---|---|---|
| February 1994 | Greenspan’s surprise tightening | +7.5% |
| June 1999 | the late-1990s cycle | +7.1% |
| June 2004 | the measured-pace cycle | +6.1% |
| December 2015 | liftoff from near-zero | +12.0% |
| March 2022 | the inflation shock | -7.8% |
4 of the 5 cycles were higher a year after the first hike. The one exception was March 2022, the inflation shock, when the S&P was down 7.8% twelve months on. That is the cycle everyone remembers, and it is fair to remember it: hiking cycles can and do coincide with bad years. But it was one year out of five, and as the next table shows, even that one turned around.
$10,000 at Each Cycle Start, Today
Widen the lens from one year to the whole holding period and the picture gets lopsided. Here is what $10,000 invested at each cycle’s first hike would be worth at the September 2026 close, still sitting in the S&P 500 today.
| Bought at | $10,000 became | Total return | Annualized |
|---|---|---|---|
| February 1994 | $290,190 | +2,801.9% | +10.9% |
| June 1999 | $89,504 | +795.0% | +8.4% |
| June 2004 | $100,086 | +900.9% | +10.9% |
| December 2015 | $44,473 | +344.7% | +14.9% |
| March 2022 | $17,931 | +79.3% | +13.9% |
Every one of the five is up, and not modestly. Even March 2022, the one cycle that was underwater a year in, has since recovered to $17,931 on that $10,000. Spread the bet across all five, putting $10,000 in at each first hike, and your $50,000 would be worth about $542,184 today.
Why the Reflex Is Wrong
The Fed hikes to cool an economy that is running warm, which usually means it hikes into strength, not weakness. Markets also price the move in ahead of time, so by the meeting itself the hike is rarely the surprise. What actually drives the bad years is a recession, and a recession is not the same thing as a rate hike, even though the two sometimes arrive together, as they nearly did in 2022. The lesson of the table is not that hiking is bullish. It is that the first hike, on its own, has been a poor reason to sell.
The Honest Caveats
Five cycles is a small sample, and this is history, not a forecast. The figures use monthly closing prices for SPY, the S&P 500 ETF, snapped to the month of each cycle’s first hike, and they exclude dividends, which understates the real total return in every row. The window is the full span of the price history behind this site, roughly 1993 through September 2026. One thing this data cannot yet show is the cycle that just began: the September 2026 hike is too recent to have a twelve-month result, so this piece sets up that question rather than answering it. Past performance does not predict future results, and nothing here is investment advice.
If seasonal and calendar timing is your thing, we also ran sell in May and go away, sitting out every September, and the worst times to invest. They rhyme with this one: the market rewards time in far more reliably than it rewards reading the calendar, or the Fed.