Stock Market Today: Dow falls 150 points, S&P 500 hovers near record level
Stock-market investors around the world were digesting the first interest-rate cut by the Federal Reserve, but history suggests the start of rate-cutting cycle by the world’s largest central bank may not represent “a major turning point” in relative strength between the U.S. and global stocks, according to Bespoke Investment Group.
The table above shows the performance of the MSCI World Ex-US index following the start of each rate-cutting cycle by the Fed since 1984, along with whether the U.S. entered a recession in the next year.
Six months following the first cut of each cycle, the MSCI World Ex-US index tended to see positive returns with a median gain of 6.5%, but one year later, the index’s median gain was just 3.48%, Bespoke analysts said in a Tuesday note.
It’s also worth noting there was “a wide divergence” in the index’s performance based on whether the U.S. economy went into recession within a year of the Fed’s first cut, the Bespoke team said.
“Foreign stocks have ‘been due’ for a turnaround in relative performance versus the U.S. for years now, but history suggests that a shift in Fed policy from tighter to looser monetary conditions hasn’t been a reliable indicator for a turnaround,” the Bespoke analysts wrote.