The Federal Reserve raised interest rates on Wednesday for the first time since 2023, lifting its benchmark rate to a range of 3.75% to 4%, and the S&P 500 finished that session around 7,550, still up about 10% for the year but about 3% below the record high it set in mid-August. Investors now head into October, historically the market's best stretch of the year: since 1985, the S&P 500 rose between the end of September and the end of December in 34 of 41 years, with an average fourth-quarter gain of about 4.4%, and since 1950 it finished the quarter higher in 61 of 76 years, or 80% of the time, with an average gain of about 4.2%. The setup does not argue against the pattern, as the index has entered the fourth quarter up 10% or more for the year 31 times since 1950 and finished those quarters higher in 26 of them. The seven fourth-quarter declines since 1985 include three severe ones: 1987 and 2008 each cost about 23% and 2018 fell about 14%, and each of those failures came from something large breaking rather than the calendar itself. The 2018 case is the one to watch this year, because the Fed was likewise raising rates as the year closed, including an increase in December 2018, and the Nasdaq Composite fell about 17% that quarter; the Fed's updated projections leave room for another increase before year-end. The S&P 500 enters this October at more than 25 times earnings, well above its long-run average.
Apple Inc.
NVIDIA CorporationFed raised the benchmark rate to 3.75%-4%, lifting the effective federal funds rate
Fed rate hike and room for another increase before year-end push Treasury yields higher
