There’s a surprising bit of good news lurking in the stock market

Investors are grappling with a painful reality check: The Federal Reserve is unlikely to slash interest rates anytime soon.

A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link. Investors are grappling with a painful reality check: The Federal Reserve is unlikely to slash interest rates anytime soon. That, at least temporarily, stalled the gangbusters 2024 stock rally and lowered morale on Wall Street. Traders fear that elevated rates will uphold painfully high borrowing costs for consumers, squeeze corporate profit and weigh down the market. The good news? History suggests that higher-for-longer rates don’t translate to painful losses for portfolios, even if there may not be much more upside near term for stocks. The benchmark S&P 500 index has added roughly 13% on average during Fed pause periods, according to LPL Financial data compiled by CNN spanning about 35 years and six stretches when rates have been on hold. The S&P 500 has gained 14% during the current period, from when the Fed last hiked rates in July 2023 through Thursday’s close. “Long pauses are typically good for stocks,” wrote Jeff Buchbinder, chief equity strategist at LPL Financial, in a Tuesday note. ”It’s when the Fed is forced to cut because of economic weakness that stocks tend to sell off — not in the environment we’re in today.”