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Call it the Powell gut punch.
The stock market lately has been known to stumble on Federal Reserve rate-decision days under Chairman Jerome Powell.
It eked out a gain in June after the Fed’s decision to “skip” a rate hike for the first time in over a year. But the S&P 500 index
SPX,
previously closed lower five out of the past six Fed decision days.
Ahead of Wednesday’s rate decision, a new chart from Bespoke Investment Group shows how “the late-day selloff is really what has characterized Powell Fed Days” when compared with past top U.S. central bankers.
Powell Fed Days, in the afternoon specifically, is when stocks are prone to selloffs.
Bespoke Investment Group
Stocks looked particularly weak under Powell in the post-meeting stretch, which includes an afternoon press briefing starting at 2:30 p.m. Eastern that concludes before the 4 p.m. Eastern closing bell.
Powell has been using recent post-meeting briefings to push back on investor hopes for rate cuts, while also saying rates will likely remain high for some time, to help drive inflation down to the central bank’s 2% yearly target.
Read: Everyone thinks the Fed’s rate hike this week will be the final one — except the Fed
Bespoke data also shows the S&P 500’s weaker overall performance on Fed days under Powell when compared with three prior central-bank heads since 1994, when the Fed began announcing policy decisions on the same day as meetings.
The rally in stocks in 2023 largely came as a surprise, with the year starting out with a U.S. recession viewed as pretty likely, due in large part to dramatic Fed rate hikes that have made borrowing more costly and credit harder to come by.
The S&P 500 is 19% higher on the year through Tuesday, according to FactSet. The Dow Jones Industrial Average
DJIA,
continued its long win streak, ending up 6.9% on the year, while the Nasdaq Composite Index
COMP,
has shot 35.1% higher since January.
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