Dow Jones Industrial Average Around Second Fed Rate Cut This chart shows that a second rate cut has been bullish. On average, the Dow Jones Industrial Average has gained 19% over the next 12 months. Image: Ned Davis Research
Fed Rate Cut vs. ISM Manufacturing Index and ISM Non-Manufacturing Index Since 1997, when the ISM Manufacturing Index is below 50 and the ISM Non-Manufacturing Index is above 52, the Fed is less aggressive, with about 68bp of easing on average. Image: Goldman Sachs Global Investment Research
U.S. Equities – One Year Return After a Fed Rate Cut The chart shows how U.S. equities have historically performed after a 25 bps and 50 bps Fed rate cut over the last 35 years. You may also like “First Fed Rate Cut.” Image: Ycharts
Russell 2000 Index/Russell 1000 Index Around First Fed Rate Cut: Recession vs. No Recession Another great chart suggesting no recession, when large caps outperform small caps, around first Fed rate cut. Image: Ned Davis Research
S&P 500 Consumer Discretionary / Industrials Around First Fed Rate Cut If consumer discretionary outperforms industrials after first Fed rate cut, then it could signal a recession. Image: Ned Davis Research
Earnings Revisions Strategy Outperforms Around First Fed Rate Cut Around first Fed rate cut, earnings revisions is the top factor out of 200 strategies. Image: Ned Davis Research
Fed Rate Cuts Boost Consumer Spending The chart shows real PCE around first Fed rate cut: recession vs. no recession. Fed rate cuts are more effective during a recession. Image: Ned Davis Research
S&P 500 Index Returns After Fed Rate Cuts Near New Highs The adage of “don’t fight the Fed” may be too simplistic, but usually, the market doesn’t care too much about other things, as long as the Fed stays dovish. Image: LPL Research
S&P 500 Index Price Average Before and After Initial Fed Rate Cut Historically, the S&P 500 Index has risen in 13 out of 16 cases after an initial Fed rate cut (since 1954). The divergence between the S&P 500 and EPS suggests that the market doesn’t care too much about other things, as long as…
Dow Jones Industrial Average Around First Fed Rate Cut After first Fed rate cut, the Dow Jones Industrial Average’s gains are +24% on average when no recession, and +11% with a recession within 12 months. Image: Ned Davis, Ed Clissold
Fed Rate Cut Is Not Necessarily a Sell Signal This chart shows the S&P 500 Index performance, 6 and 12 months after an initial Federal Reserve rate cut. You may also like “S&P 500 Performance Around Previous Fed Cuts.” Image: LPL Research