“The old adage ‘don’t fight the Fed’ refers to the relatively poor performance of the S&P 500 when the Fed is hiking interest rates,” Jeff Kleintop of LPL Financial. See the left bar in the chart below.
For now, most experts don’t expect a rate hike until at least 2013. But Kleintop warns that anticipation of a cut could put pressure on stocks.
While that action by the Fed may still be more than a year away no matter what happens, markets could begin to price in the possibility of more rapid and larger rate hikes as the leaders emerge in the great American race.
Here’s the a chart via Jeff Kleintop. The “don’t fight the Fed’ rule doesn’t seem to apply when they are cutting rates:
Photo: LPL Financial