Key points
- QQQ closed up 0.03% on hike day
- It rose on 5 of the last 11 hikes
- The two hikes nearest QQQ's highs produced modest declines
- Hike days have gone both ways
The Federal Reserve raised its benchmark rate by a quarter point Wednesday to a range of 3.75 percent to 4 percent, its first increase since July 2023. Officials' median year-end projection of 4.1 percent pointed to one more quarter-point increase in 2026.
The Nasdaq 100 barely moved. Invesco QQQ Trust (QQQ), which tracks the index, closed at $704.72, up just 0.03 percent from Tuesday's $704.54. The broader market fell: the Dow Jones Industrial Average lost 631.21 points, or 1.21 percent, and the S&P 500 declined 0.45 percent.
QQQ rose further in after-hours trading, reaching $709.53 by 9:30 p.m. ET Wednesday, about 0.7 percent above its regular-session close.
That may seem like an unusually calm response to higher rates. But the last tightening cycle offers a useful reminder: knowing the Fed would raise rates would not have told you whether QQQ would finish the day up or down.
QQQ on the last 11 rate hikes
The Fed raised rates 11 times between March 2022 and July 2023. The table uses announcement dates, when investors heard the decision and the press conference. Those dates fall one day before the effective dates listed in the Fed's rate table.
| Announced | Size | QQQ that day | Next day | Next 5 days | QQQ vs 52-week high, prior close |
|---|---|---|---|---|---|
| Mar 16, 2022 | 25 bp | +3.71 percent | +1.21 percent | +3.38 percent | -18.8 percent |
| May 4, 2022 | 50 bp | +3.38 percent | -5.04 percent | -11.46 percent | -21.1 percent |
| Jun 15, 2022 | 75 bp | +2.50 percent | -4.03 percent | +0.72 percent | -31.7 percent |
| Jul 27, 2022 | 75 bp | +4.23 percent | +0.98 percent | +5.24 percent | -27.1 percent |
| Sep 21, 2022 | 75 bp | -1.79 percent | -1.23 percent | -1.28 percent | -28.5 percent |
| Nov 2, 2022 | 75 bp | -3.43 percent | -1.95 percent | -0.89 percent | -31.9 percent |
| Dec 14, 2022 | 50 bp | -0.74 percent | -3.36 percent | -4.56 percent | -28.5 percent |
| Feb 1, 2023 | 25 bp | +2.14 percent | +3.59 percent | +1.15 percent | -20.6 percent |
| Mar 22, 2023 | 25 bp | -1.36 percent | +1.19 percent | +2.16 percent | -16.4 percent |
| May 3, 2023 | 25 bp | -0.65 percent | -0.35 percent | +2.47 percent | -4.1 percent |
| Jul 26, 2023 | 25 bp | -0.33 percent | -0.24 percent | -0.83 percent | -1.8 percent |
QQQ rose on five of those days and fell on six. Its average return was a gain of 0.69 percent. Three of the four largest moves were gains: 4.23 percent, 3.71 percent and 3.38 percent. The other was a 3.43 percent decline.
Larger hikes did not consistently mean larger losses. On the four days the Fed raised rates by three-quarters of a percentage point, QQQ gained 2.50 percent and 4.23 percent, then lost 1.79 percent and 3.43 percent.
Quarter-point increases, the same size as Wednesday's, also produced mixed results. QQQ rose 3.71 percent and 2.14 percent on two of those days and fell 1.36 percent, 0.65 percent and 0.33 percent on the other three. The size of the hike alone did not determine the direction of the market.
What the table does and does not settle
It settles one thing. Across these 11 announcements, hikes were followed by both gains and losses, so a rate increase by itself has not told an investor which way the Nasdaq 100 would close that day.
It does not settle why. One pattern is visible and worth naming carefully. The two hikes that landed with QQQ closest to its own 52-week high both produced small declines, 0.65 percent in May 2023 with the fund 4.1 percent off its high, and 0.33 percent in July 2023 with it 1.8 percent off. QQQ went into Wednesday's decision 5.6 percent below its 52-week closing high of $746.16, set on June 2, 2026. Wednesday's near-flat close was another small move, though two historical comparisons are too few to establish a reliable pattern.
The wider drawdown numbers do not support a cleaner rule. The two deepest readings in the table are almost identical and point in opposite directions. QQQ went into June 15, 2022 down 31.7 percent from its high and rose 2.50 percent, and into November 2, 2022 down 31.9 percent and fell 3.43 percent, the largest single decline of the cycle. Treat the last column as context for each session rather than as the explanation for it.
What the bond market did
The reaction showed up in Treasuries. The two-year yield rose to 4.74 percent from 4.67 percent, the 10-year rose to 5.01 percent from 5.00 percent, and the 30-year slipped to 5.35 percent from 5.36 percent, according to the Treasury Department's daily par yield curve. The short end moved most, so the curve flattened, with the difference between the two-year and the 10-year narrowing to 27 basis points from 33.
One way this cycle starts differently
March 2022 opened a tightening cycle from a range of zero to 0.25 percent. Wednesday's increase followed a series of cuts, and it raised the range to 3.75 percent to 4 percent rather than lifting it off the floor. So the 11 sessions in the table are mostly a record of a central bank catching up to an inflation shock, while Wednesday's is the first move of a turn in the other direction. That is a difference in what the Fed is doing, not a reason to expect any particular close.
It was also a crowded week to isolate the Fed's effect. The Nasdaq had already sold off on Monday after Anthropic's Dario Amodei called for slowing AI development, with Sam Altman and Elon Musk backing him, so Wednesday's tape carried more than one story.
One footnote worth keeping. The range the Fed moved to on Wednesday, 3.75 percent to 4 percent, is the same range it first reached on November 2, 2022. QQQ fell 3.43 percent that day. On Wednesday it rose 0.03 percent at the identical policy rate.
QQQ figures are split-adjusted daily closes, with Wednesday's taken from the official consolidated close. Returns are close to close and are our own calculations. The 52-week comparison uses closing prices and is measured as of the close before each announcement, so a session's own reaction is not included in its own drawdown figure. Rate-change dates are the FOMC announcement dates, which precede by one day the effective dates shown in the Federal Reserve's open market operations table. Yields are from the Treasury Department's daily par yield curve for September 15 and 16, 2026.
