History seems to be on the bull’s side.
Lastly, for investors still pondering what the Federal Reserve’s policy U-turn means for the stock market, Belski said a pause on interest rate hikes has been historically good for the market. The Fed at its last policy meeting indicated no hikes are coming this year.
BMO looked at the S&P 500’s past performance since 1990 when the central bank changed course with its monetary policy, and found that the market gained nearly 10% on average from the date of the final rate hike to the date of a rate cut.
“We would recommend that investors continue to add exposure to U.S. stocks, especially during any periods of potential weakness — something that is highly likely given the current environment,” Belski said.