History Shows ‘Slow and Steady’ Is Best Rates Mantra for Stocks
- S&P 500 gains average 11 percent in slow rate increase cycle
- Fed's latest meeting minutes point toward gradual approach
Pedestrians walk past the New York Stock Exchange in New York
Photographer: Adam Rountree/BloombergThis article is for subscribers only.
The stock market’s message for Janet Yellen has been that slow and steady on interest rates is preferable to fast and furious. History not only backs that up, it also shows the margin of victory can be wide.
U.S. stocks have gained an average of 11 percent over a year’s time when the Federal Reserve takes a gradual approach to raising lending rates, according to data from Ned Davis Research. That compares with a 2.7 percent average decrease during faster rate cycles.