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FOMC Meeting Announcement & the Markets

As the Federal Open Market Committee (FOMC) announcement for the June 22-23 policy meeting is set to be released, the market consensus expects the federal funds rate to remain unchanged. The statistics below highlight how the equity markets have performed since the rates were set near zero.

The U.S. Federal Reserve’s Target Rate is currently at an all-time historic low range between 0 to 0.25%, its lowest level since the rate was introduced by the Central Bank in 1954. Today's announcement marks the fourth so far this year.

Since December 16, 2008, the Fed has made no changes to its target rate. The major US averages, however, are up 18% or more.

Since December 16, 2008

  • Dow is up 17.7%, when it traded at 8924.14
  • S&P is up 22.9%, when it traded at 913.18
  • NASDAQ is up 45.64%, when it traded at 1589.89

Since July 1990, the Fed has made 78 changes to its monetary policy.

Current Unchanged Streak: The longest ever without a change in the target rate

  • On December 16, 2008, the Fed set the target rate to "near-zero" at a range of 0.0% to 0.25%
  • This week's announcement, would mark the fifteenth meeting since the FOMC made changes to the target rate
  • The 15 meetings include 3 unscheduled meetings on January 6, February 7, and June 3, 2009
  • On average the FOMC schedules eight meetings per year

Other notable unchanged streaks:

  • The Fed remained unchanged 13 straight meetings leading up to the FOMC meeting in September, 1998, when the Fed cut rates from 5.5% to 5.25%
  • The Fed remained unchanged 11 straight meetings leading up to the FOMC meeting in February, 1994, when the Fed increased rates from 3% to 3.25%
  • The Fed remained unchanged 10 straight meetings leading up to the FOMC meeting in September, 2007, when the Fed cut rates from 5.25% to 4.75%
  • Rates have remained unchanged or steady 42 times since the early 1990’s
  • The Day of the meeting, the Dow, S&P and NASDAQ were positive 69% of the time, and the following day, the major indexes were negative between 52% and 57% of the time
  • The Dow, S&P and NASDAQ were positive across the board 3 months and 6 months after the unchanged decision, by almost 2% or greater.

Dow Performance After Leaving Rates Unchanged:

  • Day of Meeting: Up 69%, avg gain of +0.59%
  • 1-Day After Meeting: Down 57%, avg loss of -0.22%
  • 1-month later: Up 60%, avg loss of -0.53%
  • 3-months later: Up 66%, avg gain of 2.08%
  • 6-months later: Up 64%, avg gain of 3.69%

S&P Performance After Leaving Rates Unchanged:

  • Day of Meeting: Up 69%, avg gain of +0.7%
  • 1-Day After Meeting: Down 52%, avg loss of -0.25%
  • 1-month later: Up 62%, avg loss of -0.51%
  • 3-months later: Up 68%, avg gain of 1.84%
  • 6-months later: Up 67%, avg gain of 3.34%

Nasdaq Composite Performance After Leaving Rates Unchanged:

  • Day of Meeting: Up 69%, avg gain of +0.8%
  • 1-Day After Meeting: Down 57%, avg loss of -0.41%
  • 1-month later: Up 67%, avg gain of +0.3%
  • 3-months later: Up 73%, avg gain of +2.8%
  • 6-months later: Up 72%, avg gain of +5.54%

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