The Federal Reserve’s latest quarter‑point rate increase landed in a market that has already spent months recalibrating to higher borrowing costs. While stocks initially absorbed the move with little drama, history shows that the early stages of a tightening cycle often look different from the first few trading days — and the path for both equities and bonds has varied sharply across past rate‑hike periods.

How Stocks Typically React After The First Rate Hike

Historically, stocks generally traded lower in the three months after a Fed rate increase, with a median decline of 2.7% in the last eight hiking cycles starting in 1983. Markets tended to adapt to the rising-rate environment, and stocks usually were higher in the year after rate increases begin.

With only eight data points, one should not place too much weight on the evidence, but notably, the median return in the 12 months after the first rate increase is positive but subpar.

Stocks were........

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