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Fed Hikes: Cramer's Guide to Riding Out Rate Increases
18 Sep
Summary
- Fed rate hikes historically last an average of 22 months.
- Stock leadership shifts significantly during tightening cycles.
- Selectivity is key when investing alongside Fed rate hikes.
The Federal Reserve has initiated a new cycle of interest rate increases, raising its benchmark rate by a quarter percentage point to a range of 3.75% to 4% as of 2026-09-18T00:53:22+00:00. This move signals the central bank's commitment to combating high inflation.
Historically, Fed rate-hiking cycles have persisted for an average of 22 months, though the timeline to a subsequent economic downturn is typically much longer. This historical data suggests that investors should not abandon the stock market entirely following the first rate hike.
Instead, experts advise increased selectivity, as market leadership often undergoes significant shifts throughout a tightening cycle. While defensive sectors may initially perform well, technology stocks have shown a tendency to rebound and ultimately lead over the full course of a hiking period, as seen in past cycles.
Investors are cautioned that each cycle is unique, with current inflationary pressures influenced by global events like the war in the Middle East. The key takeaway is to remain vigilant and strategic, focusing on careful stock selection rather than broadly betting against the market.
