Chart of the Week: Market Performance pre and post-Fed

May 9, 2006 11:45am by

Mike Panzner observes:   "Over the course of the current tightening cycle (comprised of 15 rate hikes beginning in June 2004), the median return for the S&P 500 on the day of an FOMC rate hike has been a loss of 0.09%,  while the median return for the day after has been a gain of 0.19%.

The best performing group on the day of a rate hike has been the Consumer Discretionary sector, with a median gain of 0.31%, while the worst performing group has been Information Technology, with a median loss of 0.23%.  On the day after the hike, the best performing group has been the Energy sector,  with a median gain of 0.73%, while the worst performing group has been the Industrials, with a median loss of 0.06%
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Market Performance pre + post-Fed

Fomcsectors_day_after

Source:  Mike Panzner

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Information Technology, Industrials, and Financials have been in the bottom four (out of 10) groups on both days, while the only sector that has been in the top four on both days is Consumer Staples.

One interesting observation: while the median return for the S&P 500 has been a small negative, only one group, Information Technology, has a median that is less than zero. Logically, that sounds wrong, but it may simply add weight to the anecdotal observation that FOMC rate days tend to be a little chaotic, with some sectors moving more sharply than others.

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Quote of the Day

“I measure what’s going on, and I adapt to it. I try to get my ego out of the way. The market is smarter than I am so I bend." 
–Martin Zweig

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Discussions found on the web:
  1. Mark commented on May 9

    Byno-

    I think your blow-off move scenario looks pretty good here. Market is setting up for an advance on tomorrow’s news to Barry’s 11,800 level. Then it’s all downhill from there. Barry’s new service “The Sweater Report” told me so. I’m going way net short tomorrow on that.

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