S&P 500 Enters Its Strongest Seasonal Stretch Days After Fed Rate Hike

The S&P 500 is heading into its historically strongest quarter of the year. Since 1985, the index has risen in 34 of the last 41 fourth quarters, according to The Motley Fool.

That comes five days after the Federal Reserve raised interest rates on Sept. 16, 2026, its first hike since 2023.

The S&P 500 closed that day around 7,550. That level put the index up roughly 10% for 2026, but about 3% below the record high it had set in mid-August, Motley Fool reporter Daniel Sparks wrote.

No other three-month period beats the fourth quarter's track record. Since 1985, the average fourth-quarter gain has run about 4.4%, according to Motley Fool's analysis of S&P 500 performance data.

A Pattern Dating to 1950

The seasonal edge is not a recent quirk. Going back to 1950, the S&P 500 has finished the fourth quarter higher in 61 of 76 years, an 80% hit rate, Motley Fool reported.

The average fourth-quarter gain over that longer stretch was about 4.2%. By comparison, the first and second quarters each averaged roughly 2%, and the third quarter gained less than 1%, per the same analysis.

The typical outcome has been stronger still. The median fourth-quarter gain since 1985 was about 6%, Motley Fool found, with a handful of severe losses dragging down the average.

Why This Year Looks Similar

Entering October with a double-digit yearly gain has not historically been a warning sign. Since 1950, the S&P 500 has started the fourth quarter up 10% or more for the year 31 times, and it finished higher in 26 of those years, according to Motley Fool's data.

As of the Sept. 16 close, 2026 is tracking toward that group. The Federal Reserve's rate decision marked its first hike since 2023, a shift detailed here that arrived just before the seasonally strong period began.

When the Fourth Quarter Has Failed

Seven fourth quarters since 1985 ended lower. Four were mild: 1994, 2000, 2007 and 2012 each saw single-digit declines that Motley Fool described as the kind long-term investors barely remember.

The other three were severe. The 1987 fourth quarter, which included that October's crash, cost the index about 23%. Losses in the 2008 quarter, set against the financial crisis, matched that figure.

The 2018 fourth quarter, which coincided with a Federal Reserve tightening cycle, fell about 14%, according to Motley Fool.

In each of those three cases, Motley Fool noted, the loss traced to a specific shock, not the calendar itself.