What happens to stocks when the Fed starts hiking? Barclays weighs in
Barclays said S&P 500 returns have been positive in every Fed rate hike cycle since the 1990s, with annualized gains from 0.1% to 7.8% and a median of 5.6%. It noted sector performance depends on whether markets view the Fed as ahead or behind the curve. Barclays also updated a Resilient Software Basket including Palantir, Datadog, Adobe, Intuit, Salesforce, and others.
How this was made
The 30-second read
Why it matters
The only company-specific content is Barclays’ rebalanced Resilient Software Basket weights and Z-scores; the article does not provide new earnings, guidance, deals, or regulatory actions for any named firm.
Market read
Traders get a sector and factor-style framing for how software names are positioned for a potential tightening cycle, but without fresh fundamentals it is more sentiment than catalyst.
What to watch
Basket Z-scores and weights do not address company-specific valuation, balance-sheet duration, or near-term guidance risk; dispersion in worst cycles suggests outcomes can diverge sharply.
Background
Barclays analyzes equity performance across Fed tightening cycles since the 1990s and argues equities often rise, with Tech and Energy strongest historically.
Ticker impact
Barclays’ rebalanced Resilient Software Basket lists Palantir with a 10% weight and a Z-score of 1.05, framing it for rate-cycle resilience.
Low likelihood of a sustained move based solely on this basket inclusion.
The only Palantir-specific detail is its weight/Z-score in Barclays’ basket; no earnings, guidance, deal, or regulatory event is disclosed.
Datadog is included in Barclays’ Resilient Software Basket at 10% weight with Z-score 0.92, implying relative positioning for tightening cycles.
Minimal incremental impact expected versus broader rate-cycle narratives.
No Datadog-specific new information is provided beyond the basket weight and Z-score.
Adobe is listed in Barclays’ Resilient Software Basket with 10% weight and Z-score 0.62 as part of a rate-hike resilience strategy.
No strong directional move expected from this article alone.
The text provides only portfolio weights/Z-scores, not earnings, guidance, or transactions.
Intuit appears in Barclays’ Resilient Software Basket at 10% weight with Z-score 0.50, tied to navigating shifting market conditions.
Limited near-term price impact.
No Intuit-specific event is described beyond its basket allocation.
Salesforce is included in Barclays’ Resilient Software Basket at 10% weight with Z-score 0.21, positioning it within the tightening-cycle thesis.
Low incremental impact expected.
The article does not cite any Salesforce operational or financial update.
Fortinet is listed in the Resilient Software Basket with 8.99% weight and Z-score 0.41, as part of Barclays’ software resilience theme.
Small, if any, price reaction attributable to this article.
Only the basket weight/Z-score is new; no Fortinet-specific news is included.
Cadence Design Systems is included in Barclays’ Resilient Software Basket at 9% weight with Z-score 0.31, under the rate-hike resilience framing.
No major directional move expected from this text alone.
The article provides no Cadence-specific event beyond its basket metrics.
Zscaler is named as a top holding in Barclays’ 20-stock long basket with a 6.38% weight, tied to the software resilience strategy.
Limited impact expected.
No Zscaler-specific new information is disclosed beyond basket weight.
Market effects
Reinforces a relative preference for Tech and Energy versus defensives during historical tightening cycles, with software singled out via a “Resilient Software Basket.”
Primarily US equity positioning; no explicit regional cross-asset transmission beyond US rate-cycle framing.
Rate-hike cycle narrative can influence global risk appetite, but the article’s actionable content is US-sector and US-basket focused.
Counterpoint
The article’s own caveat highlights 2022-2023 as an exception where market perception drove dispersion, so basket “resilience” may fail if inflation surprises or policy timing shifts.
Key entities
- financial_institutionBarclays
Provides the tightening-cycle performance analysis and the Resilient Software Basket rebalancing framework.
- investment_strategyResilient Software Basket
A 20-stock long basket with stated weights and Z-scores for software equities.
- indexS&P 500
Used as the benchmark for historical equity returns across tightening cycles.
