Market Insider

Could the stock market be gearing up for another 'Fed freakout'?

Traders work the floor of the New York Stock Exchange.
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As stocks drift quietly ahead of the 2 p.m. ET Fed minutes, some traders are already anticipating a hawkish tone and the potential for a negative market reaction.

In what it calls a "freakout," Bespoke points out that the stock market has reacted negatively to the Fed releases in 2013 and 2014 as traders viewed them as more hawkish than expected. It says these overreactions have usually resulted in a recovery the next day.

"If the experience of 2013 and early 2014 is any indication, equities could be in for a bit of a 'Fed Minute Freakout' following the 2PM release, " Bespoke said in a note. "While the S&P 500 has seen mixed intra-day returns leading up to the release of the minutes, it has declined an average of 33 bps from the time of the release through the closing bell with positive (and minimal) returns only twice. Additionally, on all but one day (7/10/13), the S&P 500's 'pre-release' performance was stronger than the performance after," it added.