Skip to Content

Market Trivia

Each quarter we offer a piece of market trivia that we believe is interesting or timely, or both.  The U.S. Fed appears to be hell-bent on raising interest rates several times in 2017.  They just hiked for the third time this cycle in June and have indicated a fourth and fifth time are likely by year end.  Tightening cycles are generally viewed as negative for stock market returns.  However, as the chart below shows, on average the market is higher in the twelve months following the fourth rate hike.  Interestingly, small caps outperform large caps by a wide margin in the twelve months following both a fourth and fifth Fed rate hike.

Earlier in the newsletter we highlighted that the S&P 500 posted positive returns in each of this year’s first six months.  Undoubtedly this performance is a rare feat.  The S&P 500’s first half return was +9.3% and bodes well for the rest of the year if history holds.  In years when the S&P 500 is up more than +8% in the first half of the year, the median performance for the second half of the year is +8.4%, which is almost double the historical median return for all second half’s for the S&P 500.

We hope that you found our second quarter 2017 and updated 2017 outlook newsletter insightful and interesting.  Should you have any questions about anything discussed herein or would like more information about 1492 Capital Management, please call us at 414-276-1492.