Bespoke publishes an in-depth look at the market’s historical performance on Fed Days prior to each FOMC meeting. One of the things we note each time is how well the S&P 500 has historically done on Fed Days since 1994 when the Fed began announcing its policy decisions on the same day as its meetings. (Prior to 1994, the Fed’s decisions were not released immediately, so the stock market did not have any Fed news to react to on meeting days.) Historically, the S&P has averaged a one-day gain of nearly 30 basis points on Fed Days. That’s 10x as strong as the average one-day change of 0.03% that the S&P has experienced on all trading days throughout history.
But gains on Fed Days have been few and far between lately. Below we show the average one-day change for the S&P 500 over the last 10 Fed Days, and we roll the 10 Fed Day reading back to 1994. As shown, the current average one-day change of -0.30% for the S&P over the last 10 Fed Days is very negative by historical standards. There have only been two prior periods (early 2001 and early 2006) where the average was lower than it is now.
The 10 Fed Day average for the S&P is not being weighed down by just one or two extremely negative one-day moves. In fact, the S&P has declined on nine of the last ten Fed Days! As shown below, there has never been a prior 10 Fed Day period where the S&P declined on at least nine of those days. And coincidentally (?), 10 Fed Days ago was when Fed Chair Powell first took the helm! As we noted in today’s Morning Lineup ahead of the open, Powell is going to have to break out of this rut at some point! Start a two week free trial to one of Bespoke’s premium memberships to access our suite of investment tools and daily equity market research.