A picture is worth a thousand words, right? I’m definitely a visual learner and know that charts are sometimes much better at illustrating a point than explaining it through 5 paragraphs of text, so I’m going to start a new series on the blog called “Chart of the Week” where I post something interesting I found over the past week.
We’ll kick things off this week with a chart illustrating what many call “The Fed Effect.” That is, stocks tend to rise during the day before and day of a FOMC meeting – and that’s exactly what happened this week. The Fed concluded a two-day meeting on Wednesday where they announced that they’re raising the target of the Fed Funds rate to a range of 0.25% to 0.50% (from the previous 0% to 0.25% range). Stocks rallied on Tuesday and Wednesday (day before and day of, highlighted in the chart below) but since have reversed course.
S&P 500 – this week
And here’s a chart, via Liberty Street Economics at the Federal Reserve Bank of New York, illustrating the difference in performance of the S&P 500 Index if you take out the 24 hour period prior to all FOMC announcements between 1994 and 2011 (this chart was made a few years ago but “the Fed effect” is still in full force today).
I hope everyone has a great weekend!
-Nick