LPL Financial: When the Federal Reserve cuts rates and then pauses, the S&P 500 has an average return of 7.8%

LPL Financial analyst Adam Turnquist pointed out in a report that, historically, the stock market is usually able to weather the transition to monetary tightening after a long pause in rate adjustments. He stated that, in fact, when the Federal Reserve cut rates before a pause, market performance was particularly strong. Turnquist noted that in such scenarios, the S&P 500 Index had an average return of 7.8% in the 12 months after the first rate hike following a pause. In contrast, during periods when rate hikes preceded a pause, the index's average return was only 0.8%. Before this latest round of unchanged rates, the Federal Reserve had cut rates last December, and this period of holding steady is expected to end with a rate hike later today.