S&P 500 Has Delivered ‘Muted Returns’ During Fed Cycles With More Than 5 Rate Hikes, Says Ryan Detrick

The S&P 500 has historically posted more muted returns during Federal Reserve tightening cycles that featured five or more rate hikes, according to historical market data shared by Carson Group Chief Market Strategist Ryan Detrick.

Historical Data Reveals Muted S&P 500 Performance

Detrick identified 12 post-World War II tightening cycles in which the Fed raised rates at least five times.

While the S&P 500 index was “usually higher” during these periods—achieving positive total returns in 72.7% of cycles—”muted returns were common,” resulting in a median annualized return of 5.6%.

Since WWII, there have been 12 cycles that saw the Fed hike at least five times.

Stocks were usually higher during the hiking cycle, but muted returns were common.

Assuming they start hiking tomorrow, the bigger questions is how many more hikes could be around the corner? pic.twitter.com/i3Q8RSkR1j

— Ryan Detrick, CMT (@RyanDetrick) September 16, 2026

Wall Street Research Corroborates Market Resilience

Data from LPL Research supports the trend of market durability during monetary tightening. Analyzing six Fed tightening cycles since 1994, LPL strategists observed that while stocks often experience initial turbulence over the first four months, the S&P 500 achieved a median 12-month gain of 10.7% following an initial rate increase.

LPL said rate hikes alone “do not typically derail bull markets” unless accompanied by rising recession risks.

Fed Decision Backdrop and Economic Debate

The historical analysis arrives as the CME FedWatch tool is pricing in about 92.5% probability of a 25-basis-point rate hike at Wednesday’s Federal Open Market Committee meeting, which would lift the benchmark target range to 3.75%–4.00%.

Wall Street economists remain divided on whether the move signals an extended cycle. Moody’s Economist Mark Zandi warned that “the odds of a serious Fed policy mistake are uncomfortably high and rising,” cautioning that aggressive policy moves could trigger a “self-reinforcing” economic downturn.

Conversely, Ebury Head of Market Strategy Matthew Ryan told Benzinga that he expects a “one and done” hike, anticipating Fed Chair Kevin Warsh will leave the committee’s next move “deliberately unclear.”

Meanwhile, Trade Nation Senior Market Analyst David Morrison also told Benzinga that 10-year Treasury yields surging above 5% reflect market repricing amid sticky inflation and substantial government debt issuance.

How Have Stock Markets Performed in 2026?

The S&P 500 index has advanced 10.60% year-to-date. Similarly, the Nasdaq Composite index was up 11.82%, and the Dow Jones gained 7.67% YTD.

On Tuesday, the SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 and Nasdaq-100, respectively, closed lower. SPY fell 0.46% to $757.39, while QQQ fell 0.65% to $704.54. Meanwhile, the Dow tracker, State Street SPDR Dow Jones Industrial Average ETF Trust (NYSE:DIA), also ended 0.62% lower at $521.23.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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