How The S&P 500 Index Has Performed Since The Federal Reserve Began Hiking Interest Rates On 12/16/15

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How The S&P 500 Index Has Performed Since The Federal Reserve Began Hiking Interest Rates On 12/16/15

Posted Under: Broader Stock Market

View from the Observation Deck

The Federal Reserve (the "Fed") has increased the federal funds target rate a total of seven times since 12/16/15. Each one of the rate hikes was for 0.25%, or 25 basis points. The target rate (upper bound) currently stands at 2.00%.
As indicated in the chart, the S&P 500 Index posted a cumulative total return of 40.3% from 12/16/15 through 7/6/18. Only three sector indices returned more than the broader index over that period.
Since 12/16/15, S&P 500 Index quarterly earnings (EPS in $) have risen from $24.82 in Q1'16 to $35.45 in Q1'18, or an increase of 42.8%, in line with its cumulative total return of 40.3%, according to data from Bloomberg.
While nobody knows how long the current bull market in stocks will run, we believe that the direction of stock prices is driven by corporate earnings over time.
On 7/6/18, the S&P 500 Index closed the trading session at 2,759.82, 3.94% below its all-time high of 2,872.87 set on 1/26/18, according to Bloomberg.
Earnings reporting season for Q2'18 is currently underway and expectations are high. Stay tuned.

This chart is for illustrative purposes only and not indicative of any actual investment. There can be no assurance that any of the projections cited will occur. The illustration excludes the effects of taxes and brokerage commissions and other expenses incurred when investing. Investors cannot invest directly in an index. The S&P 500 Index is a capitalization-weighted index comprised of 500 stocks used to measure large-cap U.S. stock market performance, while the 11 major S&P 500 Sector Indices are capitalization-weighted and comprised of S&P 500 constituents representing a specific sector.

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Posted on Tuesday, July 10, 2018 @ 1:05 PM • Post Link

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These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.

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