Since 1994, the S&P 500 has usually kept rising after the Federal Reserve starts raising rates: in the 12 months after the first hike of a cycle, the index was higher in 5 of 6 cycles, with a median gain of 7.8% [1][2][3]. First rate cuts have a wider range of outcomes: the index rose after 4 of 6 cutting cycles but fell 14.6% after the January 2001 cut and 18.7% after the September 2007 cut, because both came as the economy entered a recession [3][4]. The Fed's September 16, 2026 hike, to a target range of 3.75%-4.00%, was its first increase since July 2023 [1].
How many times has the Fed raised and cut rates since 1994?
DataPorium's record of Federal Open Market Committee (FOMC) decisions lists 52 rate increases and 40 rate cuts from February 1994 through September 2026 [1]. The FOMC is the Fed committee that sets the federal funds rate, the overnight rate banks charge each other. The decisions group into six hiking cycles before 2026 and six cutting cycles, where a cycle starts with the first move after a pause or a move in the other direction.
Until December 16, 2008, the Fed set a single target rate; since then, it has set a range a quarter point wide [1]. A quarter point is 25 basis points; a basis point is one hundredth of a percentage point.
What did stocks do after the first rate hike?
The table compares the S&P 500's average level in the month of each cycle's first hike with its average level 12 months later. Monthly averages of daily closes smooth out single-day swings and are available on the same basis for the whole period [2][3].
| First hike | Fed rate path | S&P 500, month of first hike | 12 months later | Change |
|---|---|---|---|---|
| February 4, 1994 | 3.00% to 6.00% (7 hikes to February 1995) | 471.58 | 481.92 | +2.2% |
| March 25, 1997 | 5.25% to 5.50% (1 hike) | 792.16 | 1,076.83 | +35.9% |
| June 30, 1999 | 4.75% to 6.50% (6 hikes to May 2000) | 1,322.55 | 1,461.96 | +10.5% |
| June 30, 2004 | 1.00% to 5.25% (17 hikes to June 2006) | 1,132.76 | 1,202.25 | +6.1% |
| December 16, 2015 | 0%-0.25% to 2.25%-2.50% (9 hikes to December 2018) | 2,054.08 | 2,246.63 | +9.4% |
| March 16, 2022 | 0%-0.25% to 5.25%-5.50% (11 hikes to July 2023) | 4,391.27 | 3,968.56 | -9.6% |
| September 16, 2026 | 3.50%-3.75% to 3.75%-4.00% | n/a | n/a | n/a |
Source: rate decisions from DataPorium Interest Rates [1]; S&P 500 monthly averages of daily closes from Robert J. Shiller's data (1994 to 2021) and FRED (2022 onward) [2][3]. Price changes exclude dividends.
The pattern makes sense: the Fed usually starts raising rates when the economy and corporate profits are growing, and that growth can outweigh the drag from higher borrowing costs for a while. The exception was 2022, when the Fed raised rates faster than in any other cycle in the table, including four hikes of 75 basis points, as it responded to high inflation [1]. On a daily basis, the S&P 500 closed at 4,357.86 on March 16, 2022 and at 3,960.28 a year later, a 9.1% decline [2].
The first hike is not the whole story. In the 2004 cycle, the Fed raised rates 17 times in a row over two years, and in 1994 the index barely moved in the first year as the rate doubled from 3.00% to 6.00% [1][3].
What did stocks do after the first rate cut?
Rate cuts tell two different stories, depending on why the Fed is cutting. When it trims rates while the economy is still growing, sometimes called an insurance cut, stocks have tended to rise. When it cuts because a recession is starting, stocks have fallen anyway.
| First cut | Fed rate path | S&P 500, month of first cut | 12 months later | Change | Recession within 12 months? |
|---|---|---|---|---|---|
| July 6, 1995 | 6.00% to 5.25% (3 cuts to January 1996) | 557.37 | 644.07 | +15.6% | No |
| September 29, 1998 | 5.50% to 4.75% (3 cuts to November 1998) | 1,020.64 | 1,318.17 | +29.2% | No |
| January 3, 2001 | 6.50% to 1.00% (13 cuts to June 2003) | 1,335.63 | 1,140.21 | -14.6% | Yes (March to November 2001) |
| September 18, 2007 | 5.25% to 0%-0.25% (10 cuts to December 2008) | 1,497.12 | 1,216.95 | -18.7% | Yes (December 2007 to June 2009) |
| July 31, 2019 | 2.25%-2.50% to 0%-0.25% (5 cuts to March 2020) | 2,996.11 | 3,207.62 | +7.1% | Yes (February to April 2020) |
| September 18, 2024 | 5.25%-5.50% to 3.50%-3.75% (6 cuts to December 2025) | 5,621.26 | 6,584.02 | +17.1% | No |
Source: rate decisions from DataPorium Interest Rates [1]; S&P 500 monthly averages from Shiller's data and FRED [2][3]; recession dates from the National Bureau of Economic Research (NBER) [4].
The 2019 cycle shows the limits of the rule. The Fed cut three times in 2019 while the economy was still growing, then cut by 50 basis points on March 3, 2020 and by 100 basis points on March 15, 2020, at unscheduled meetings, as the pandemic began [1]. The NBER dates a recession from February to April 2020, yet the S&P 500 was still 7.1% higher a year after the first cut [3][4].
The latest cycle had a pause. After cutting three times from September to December 2024, the Fed held rates at its first five meetings of 2025 and resumed with cuts on September 17, October 29 and December 10, 2025 [1]. The S&P 500 closed at 6,600.35 on September 17, 2025 and at 7,637.76 on September 17, 2026, a 15.7% gain [2].
Since 1994, the S&P 500 rose in the year after 5 of 6 first Fed hikes, while first cuts were followed by declines only when a recession was underway, in 2001 and 2007.
What does the September 2026 hike mean for stocks?
The September 15-16, 2026 meeting raised the target range by 25 basis points to 3.75%-4.00%, effective September 17, after the range had been held at 3.50%-3.75% at every meeting in 2026 before that [1]. It was the first increase since July 26, 2023, and it came about nine months after the last cut, in December 2025 [1].
The S&P 500 closed at 7,551.81 on September 16, 2026 and at 7,807.24 on October 12, 2026, up 3.4% [2]. A single hike after a short pause does not yet define a cycle; history includes both a one-time increase (March 1997) and long runs of hikes (2004 to 2006) [1]. The FOMC's next scheduled meeting is October 27-28, 2026, followed by December 8-9, 2026; the full calendar of decisions is on DataPorium's interest rates page [1].
Why the first move is a weak signal on its own
- Small sample: six hiking and six cutting cycles since 1994 are too few for firm statistics, and each one had different causes [1].
- Other forces move stocks: corporate earnings, inflation and valuations change over the same 12 months, and a rate decision is only one input among them.
- The reason for the move matters most: both declines after a first cut came with recessions dated by the NBER, and the one decline after a first hike came in 2022, the fastest hiking cycle in the table [1][4].
- Price only: the figures exclude dividends, the S&P 500's dividend yield ranged from about 1.1% (August 2000) to 3.6% (March 2009) between 1994 and mid-2023, so total returns were somewhat higher [3].
Frequently asked questions
Do stocks go down when the Fed raises interest rates?
Not usually in the first year. The S&P 500 rose in the 12 months after 5 of the 6 first hikes since 1994; the exception was 2022, when it fell 9.6% [1][2][3].
How do stocks perform after the first Fed rate cut?
It depends on the economy. After first cuts without a recession (1995, 1998 and 2024), the index gained 15.6% to 29.2% in a year; after the 2001 and 2007 cuts, which came as recessions began, it fell 14.6% and 18.7% [3][4].
When was the last Fed rate hike before September 2026?
July 26, 2023, when the Fed raised its target range to 5.25%-5.50% [1]. The September 16, 2026 increase was the first since then.
How many rate hike cycles has the Fed had since 1994?
Six before 2026, starting in February 1994, March 1997, June 1999, June 2004, December 2015 and March 2022, plus the hike of September 16, 2026 [1].
Sources & References
- [1] DataPorium Interest Rates (Federal Reserve rate decisions since 1994)
- [2] Federal Reserve Bank of St. Louis, FRED, S&P 500 (SP500), source S&P Dow Jones Indices (accessed October 13, 2026)
- [3] Robert J. Shiller, Yale University, U.S. Stock Markets 1871-Present and CAPE Ratio (monthly S&P composite prices, accessed October 13, 2026)
- [4] National Bureau of Economic Research, US Business Cycle Expansions and Contractions (accessed October 13, 2026)
