Initial Reaction To The FOMC Decision

The knee-jerk reaction to the FOMC decision and statement was positive. Stocks gained on the news and are currently trading at new highs for the recovery.

Let's look at each of the days the FOMC announced their decision on rates since 2013 when they moved to a 2pm release. We'll look at SPY to see if it gained or lost in the first 1/2 hour after the decision, and then how it performed after that first half hour into the close and then the next day.

First, when it gained:

Returns were mixed to slightly positive, both into the close and the next day. There were two days in 2013 when it reversed modestly into the close, but overall the losses were limited. The next day, there were two losses of more than 1% but overall the skew was modestly positive.

Now for when the knee-jerk reaction was negative:

Returns were not as good here. There were a couple of large positive reversals into the close, but overall the tone was negative, including into the next day.

Overall, this would hint that the positive initial reaction we're seeing today is a (very) minor positive for short-term bulls, or at the very least, not a negative as traders have not consistently reversed the initial thrust after prior occurrences.