Years of History Warn What a September Rate Hike Could Mean for Stocks

Investors are bracing for a potential Federal Reserve rate hike at its next meeting on Sept. 16, with stubborn inflation and solid August job growth pointing to a September move. A common rule of thumb is that higher rates hurt stock prices, since investors can earn more from bonds. But research from Charles Schwab complicates that story using nearly 80 years of data since 1946. The S&P 500 has shown average maximum drawdowns of about -12% within six months and -14% within 12 months after the first hike, with faster tightening linked to deeper declines (about -16%). Still, markets have tended to rebound quickly.