Barclays Analysis Finds S&P 500 Gains During Rate Hikes

Barclays released a report analyzing S&P 500 performance during Federal Reserve interest rate hike cycles from the 1990s to the present. The analysis reveals that the index has produced positive annualized returns in every such cycle, with a median gain of 5.6%, because these hikes generally occur during periods of healthy economic growth.

Historically, the Technology and Energy sectors have achieved the strongest median annualized returns at 14% and 8.8%, respectively, although both sectors experience significant volatility. The firm cautioned that future market performance depends on whether investors perceive the central bank as being ahead or behind the curve, noting that the inflation battle of 2022-2023 diverged from historical norms.

Based on this outlook, Barclays rebalanced its Resilient Software Basket. This updated portfolio features top holdings including Palantir Technologies, Datadog, and Adobe.