What happened last time? › Inflation
What happens when core inflation is above 4%?
It has happened 9 times since 1958. A year after it began, the S&P 500 was up 4 of 9 times, with a median move of -2.5%. On an ordinary day in the same years the median was +10.4%, up 75% of the time.
Core CPI above 4% a year. Not true on 2026-09-25.
What came next
| 1 month later | 1 year later | 3 years later | |
|---|---|---|---|
| S&P 500 | +2.1% 67% up · n 9 · normal +1.1% | -2.5% 44% up · n 9 · normal +10.4% | +28.5% 89% up · n 9 · normal +27.7% |
| Gold | -0.6% 44% up · n 9 · normal 0.0% | -0.2% 44% up · n 9 · normal +2.9% | +8.3% 67% up · n 9 · normal +10.4% |
| Oil | -2.7% 22% up · n 9 · normal 0.0% | 0.0% 44% up · n 9 · normal 0.0% | +11.0% 56% up · n 9 · normal +8.9% |
| 10-year yield (pts) | -0.08 pts 22% up · n 9 · normal 0.00 pts | +0.59 pts 67% up · n 9 · normal +0.07 pts | +0.10 pts 56% up · n 9 · normal -0.06 pts |
| Inflation, CPI y/y (pts) | +0.08 pts 67% up · n 9 · normal -0.00 pts | +1.41 pts 78% up · n 9 · normal +0.03 pts | +0.94 pts 56% up · n 9 · normal -0.03 pts |
| Unemployment rate (pts) | -0.10 pts 22% up · n 9 · normal 0.00 pts | -0.70 pts 11% up · n 9 · normal -0.30 pts | -1.00 pts 22% up · n 9 · normal -0.60 pts |
Median move after each episode began, how often it rose, and how many episodes had data. "Normal" is the same move from any trading day in the same years.
Every time it happened
- 2021-11-10 · true for 547 trading days · S&P 500 a year later: -14.9%
- 2021-07-13 · true for 44 trading days · S&P 500 a year later: -13.0%
- 1987-10-16 · true for 1116 trading days · S&P 500 a year later: -2.5%
- 1987-06-15 · true for 22 trading days · S&P 500 a year later: -9.5%
- 1986-08-15 · true for 85 trading days · S&P 500 a year later: +35.1%
- 1985-11-15 · true for 145 trading days · S&P 500 a year later: +23.4%
- 1983-12-16 · true for 462 trading days · S&P 500 a year later: +0.2%
- 1973-11-15 · true for 2420 trading days · S&P 500 a year later: -29.8%
- 1968-03-18 · true for 898 trading days · S&P 500 a year later: +9.9%
- 9 separate episodes: a new one starts after 30 days without a match, so one long selloff counts once.
- Few episodes: read the ranges and the interval, not just the median.
- Try enough situations and one will look like an edge by chance.
- Macro numbers are as published at the time. Stocks include companies that later died.
- How these numbers are made.
More about inflation
- What happens when inflation is above 3%?
- What happens when inflation is above 4%?
- What happens when inflation is above 5%?
- What happens when inflation is above 6%?
- What happens when inflation is above 8%?
- What happens when inflation is above 10%?
- What happens when inflation is below 1%?
- What happens during deflation (prices falling over a year)?