Investors are bracing for a potential downturn in U.S. stocks in the near term. According to LPL Financial, the S&P 500 has a median decline of 2.6% in the three months following the first rate hike in a rate-hiking cycle. This data examines six cycles since the Federal Reserve began publishing its meeting results in 1994. Lori Calvasina, head of U.S. equity strategy at RBC, said that in most of these periods, the index experienced a “meaningful pullback” shortly after the first rate hike. RBC stated that in five of these cycles, the S&P 500 fell between 8% and 14% from its peak, with lows occurring between one and three and a half months after the rate hike. “We are entering this new phase, which keeps us alert, and we expect a typical pullback of 5% to 10% in the S&P 500 in the near term,” Calvasina said.
