U.S. Equity Strategy: Food for Thought: Going on a hiking trip

Research evidence excerpt

U.S. Equity Strategy: Food for Thought: Going on a hiking trip

Equity Research

Equity Strategy

12 June 2026

U.S. Equity Strategy

Food for Thought: Going on a

hiking trip

With sticky inflation pulling up calendar targets for the

"reversal of easing", we examine SPX returns around similar Venu Krishna, CFA

moves in the past, finding little evidence of headwinds +1 212 526 7328 venu.krishna@barclays.com

leading into the event but some potential for muted returns BCI, US

in the weeks and months after, if history is any guide. Rex Feng

+ 1 212 526 6114

rex.feng@barclays.com

FIGURE 1. S&P 500 returns around prior Fed reversals of easing BCI, US

Riddhiman Dass

S&P 500 Performance Around Fed Reversal of Easing +1 212 526 0850

40% riddhiman.dass@barclays.com

30% 1983 BCI, US

20%

10% 1987 Tianqi Feng

0% +1 212 526 9179

-10% 1994 tianqi.feng@barclays.com

-20% BCI, US

-30%

-40% 2004

First Hike -50%

Trading Days Until/Since First Hike

The Fed did not announce targeted rate changes prior to 1994. For 1983 and 1987, we anchor dates to Fed meetings

immediately preceding rates tightening.

Source: Bloomberg, Barclays Research

Markets are now pricing the resumption of Fed hikes around year-end, following the latest

inflation prints. The Fed has "reversed easing" (i.e., cutting cycle, followed by a period of

holding rates steady, followed by the resumption of hikes) 5 notable times in the last several

decades. In most cases, the impending reversal was not a major headwind for S&P 500 returns

over the 6 months leading into the event. However, equity market performance following the

first hike was typically quite muted, averaging low-single-digit downside with a downside hit

rate fluctuating between 3-4 instances out of 5, between 2 weeks and 3 months ex-post.

Barclays Capital Inc.