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What happens when the Fed cuts rates during a recession?
It has happened 11 times since 1980. A year after it began, the S&P 500 was up 10 of 11 times, with a median move of +10.6%. On an ordinary day in the same years the median was +12.2%, up 79% of the time.
a Fed rate cut in the last 30 days · in a recession, as announced by NBER at the time. Not true on 2026-09-25.
What came next
| 1 month later | 1 year later | 3 years later | |
|---|---|---|---|
| S&P 500 | -0.4% 45% up · n 11 · normal +1.3% | +10.6% 91% up · n 11 · normal +12.2% | +32.1% 100% up · n 11 · normal +35.4% |
| Gold | +2.1% 64% up · n 11 · normal +0.0% | +11.4% 64% up · n 11 · normal +3.0% | +11.2% 91% up · n 11 · normal +9.2% |
| Oil | +1.5% 73% up · n 11 · normal +0.3% | -0.5% 36% up · n 11 · normal +0.2% | -9.4% 36% up · n 11 · normal +5.9% |
| 10-year yield (pts) | -0.14 pts 27% up · n 11 · normal -0.02 pts | -0.97 pts 36% up · n 11 · normal -0.18 pts | -0.51 pts 27% up · n 11 · normal -0.59 pts |
| Inflation, CPI y/y (pts) | +0.02 pts 50% up · n 10 · normal -0.01 pts | -0.10 pts 45% up · n 11 · normal -0.08 pts | +0.04 pts 55% up · n 11 · normal -0.36 pts |
| Unemployment rate (pts) | +0.30 pts 67% up · n 9 · normal 0.00 pts | +0.30 pts 64% up · n 11 · normal -0.30 pts | -0.70 pts 27% up · n 11 · normal -0.90 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
- 2008-12-16 · true for 20 trading days · S&P 500 a year later: +21.5%
- 2003-06-25 · true for 15 trading days · S&P 500 a year later: +17.0%
- 2002-11-06 · true for 21 trading days · S&P 500 a year later: +14.5%
- 2001-11-26 · true for 28 trading days · S&P 500 a year later: -21.1%
- 1992-09-04 · true for 20 trading days · S&P 500 a year later: +10.6%
- 1992-07-02 · true for 21 trading days · S&P 500 a year later: +8.3%
- 1992-04-09 · true for 21 trading days · S&P 500 a year later: +10.3%
- 1991-08-06 · true for 96 trading days · S&P 500 a year later: +8.1%
- 1991-04-30 · true for 21 trading days · S&P 500 a year later: +9.8%
- 1982-07-20 · true for 111 trading days · S&P 500 a year later: +51.8%
- 1980-06-03 · true for 50 trading days · S&P 500 a year later: +18.3%
- 11 separate episodes: a new one starts after 30 days without a match, so one long selloff counts once.
- 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.
More about events
- What happens after the Fed cuts rates?
- What happens after the Fed raises rates?
- What happens when the Fed cuts rates with no recession announced?
- What happens when the Fed has not raised rates for a year?
- What happens after a bank failure?
- What happens to markets after a war or attack?
- What happens after a market crash?
- What happens during a government shutdown?