Elevated interest rates are a headwind

Sources: Bloomberg and Wells Fargo Investment Institute. Monthly data from January 1, 1971 to December 31, 2023. The S&P 500 Index is a market-capitalization-weighted index considered representative of the U.S. stock market. An index is unmanaged and not available for direct investment. Past performance is no guarantee of future results. Investing in stocks involves risk and their returns and risk levels can vary depending on prevailing market and economic conditions. Fed = Federal Reserve.

Key Takeaways

  • Tightening cycles have typically been a headwind to stock returns. In fact, historically, stocks have not found a major bottom until after the last Fed rate hike and the Fed starts cutting rates.