Kevin Warsh makes his debut at the helm of the Federal Reserve on Wednesday, as the central bank wraps a policy meeting with markets broadly expecting rates to stay on hold at 3.50%-3.75%.
While all eyes are on what Warsh says in his first press conference — and on how Fed officials reshape the dot plot against a backdrop of stickier inflation and the war in Iran — there’s another question worth asking: How has the S&P 500 historically performed once a new Fed Chair takes over?
The last seven leadership handovers since 1970 are shown below, each paired with the market’s forward 1-month, 3-month, 6-month and 12-month returns.
| Fed Chair | Start | S&P 500’s return after 1 month | +3 months | +6 months | +12 months |
|---|---|---|---|---|---|
| Burns | Feb 1, 1970 | +4.6% | -5.0% | -10.2% | +12.4% |
| Miller | Mar 8, 1978 | +3.0% | +14.1% | +21.6% | +13.4% |
| Volcker | Aug 6, 1979 | +2.4% | -3.0% | +10.9% | +16.5% |
| Greenspan | Aug 11, 1987 | -3.4% | -27.4% | -23.2% | -21.2% |
| Bernanke | Feb 1, 2006 | +0.7% | +1.8% | -0.9% | +12.7% |
| Yellen | Feb 3, 2014 | +6.0% | +8.2% | +11.3% | +17.7% |
| Powell | Feb 5, 2018 | +2.7% | +0.9% | +7.6% | +3.4% |
| Average | +2.3% | -1.5% | +2.5% | +7.9% | |
| % Positive | 86% | 57% | 57% | 86% |
One Month Later: A Reliable Honeymoon
In the first month after a new chair takes office, the S&P 500 — tracked by the SPDR S&P 500 ETF Trust (NYSE:SPY) — has returned an average of 2.3%, posting gains in six of seven episodes.
The best showing came under Janet Yellen, with the index up 6.0% in the month after her February 2014 start. Yellen inherited a maturing bull market and a strengthening recovery, and her dovish, continuity-first message reassured investors that the Fed would taper its bond buying only gradually while keeping rates pinned near zero — removing a major source of uncertainty.
The lone decline belonged to Alan Greenspan, down 3.4%. Greenspan was simply unlucky with timing.
Three Months Later: The Greenspan Distortion
Three months out, only four of seven episodes were positive, dragging the average to a negative 1.5%.
That figure is heavily skewed by the 27.4% collapse that followed Greenspan’s start, as the market endured the October 1987 crash — a selloff driven by stretched valuations, portfolio insurance and program trading far more than by monetary policy.
In other words, it was less a Fed event than a market accident.
Six Months Later: Recovery Reasserts Itself
Six months on, four episodes were again positive, with an average return of 2.5%.
Greenspan’s era kept the worst outcome at -23.2%, while the strongest belonged to G. William Miller, with the S&P 500 up 21.6% half a year after his March 1978 arrival.
One Year Later: Green Dominates
A year out, the greens outweigh the reds by six to one. The only negative came under Greenspan, with the S&P 500 still more than 20% below its level a year after he took over in August 1987. The best 12-month return again went to Yellen, with the index up 17.7%.
Notably, the last three Fed Chairs — Ben Bernanke, Yellen and Jerome Powell — all presided over a higher S&P 500 one year into their tenure.
The Bottom Line
Strip out the 1987 crash, which had little to do with who was running the Fed, and the pattern is clear: a new Fed Chair has historically been more friend than foe to the stock market.
For Warsh, history sets a constructive — if not guaranteed — starting point.
Photo: Rawpixel.com / Shutterstock.com
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