Prior to each FOMC meeting and policy announcement, we send out a “Fed Days” report that focuses on the market’s expected and historical reaction to rate decisions.  If you’re not currently a paid Bespoke research member, you can view this month’s Fed Days report published this past Tuesday here.

Since the end of 1994 when the Fed began announcing policy decisions on the day of its meetings, the S&P 500 has averaged a gain of roughly 0.34% on Fed Days.  That may not seem like much, but it’s more than 10x the average change of 0.03% for all trading days since 1995.  And the gains really add up over time.  Below is a chart (from our Fed Days report) showing the growth of a $100 investment in the S&P 500 if you only held the index on Fed Days since 1995.  As shown, your $100 would now be worth $180.  That’s an impressive return considering that Fed Days only make up 3% of all trading days.


Below is a chart showing the growth of $100 invested in the S&P 500 on all days except for Fed Days since 1995.  We also include the data from the chart above showing the growth of $100 invested in the S&P on just Fed Days over the same time period.  As shown, $100 in the S&P on all days except for Fed Days leaves you with $257 today.  That’s not bad, but it’s also not multiples higher than the $180 that only investing on Fed Days has yielded.  Basically, while Fed Days have made up just 3% of all trading days since 1995, they’ve accounted for roughly 35% of the S&P 500’s gains.  That’s a significant amount!

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