20 ETFs Primed For Unusually Big Swings On Fed Meeting Days

As markets brace for the Federal Reserve's final policy meeting of the year, scheduled at 2:00 p.m. Wednesday, Goldman Sachs highlighted 20 exchange-traded funds (ETFs) that have historically shown outsized moves around Fed decision days.

While a 25-basis-point rate cut to a target range of 4.25%-4.50% is widely anticipated, the market's focus is on the Fed's forward guidance, particularly the Summary of Economic Projections (SEP) and the updated “dot plot.”

Following December's expected cut, Goldman Sachs projects a more measured pace of easing next year, forecasting rate cuts in March, June, and September, with the terminal rate seen at 3.50%-3.75%.

Read Also: All Eyes On December Fed Meeting As Traders Await Interest Rate Projections

Market Dynamics Around Fed Days

U.S. equity markets have displayed strong short-term gains during Fed meeting weeks in 2024.

Investors employing a simple strategy of buying the S&P 500 index at market close before a Federal Open Market Committee (FOMC) announcement and selling at close the following day have captured median returns of 1.1% across the past seven meetings.

Yet those extending the trade horizon to 15 sessions post-Fed meeting have enjoyed significantly larger average gains of 3.29%, more than double the short-term returns. Notably, every Fed meeting this year has resulted in positive 15-day returns.

"We observe that U.S. banking ETFs, such as SPDR S&P Bank ETF (NYSE:KBE) and SPDR S&P Regional Banking ETF (NYSE:KRE), have seen unusually large moves on FOMC days since 2022" Goldman analysts wrote in a recent note.

For bond-focused investors, the report highlights consistent post-meeting gains in high-yield and investment-grade ETFs like iShares iBoxx $ High Yield Corporate Bond ETF (NYSE:HYG) and iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSE:LQD).

Meanwhile, energy-focused ETFs, such as the United States Oil Fund (NYSE:USO), have seen negative reactions.

ETFs Showing Heightened Fed-Day Moves

Here's Goldman Sachs' list of 20 ETFs with the largest absolute moves – which include both positive and negative swing – on FOMC days:

ETF Name	Focus	Average Absolute Move on FOMC since 2022	Average Absolute Move (Last 3 FOMC events)
SPDR S&P Regional Banking ETF	Regional Banking	2.5%	1.5%
VanEck Semiconductor ETF (NASDAQ:SMH)	Semiconductor	2.4%	3.7%
iShares Semiconductor ETF (NASDAQ:SOXX)	Semiconductor	2.4%	3.3%
SPDR S&P Bank ETF (NYSE:KBE)	US Large Banks	2.2%	1.3%
SPDR S&P Biotech ETF (NYSE:XBI)	Biotech	2.0%	0.3%
United States Oil Fund	Oil	1.9%	2.0%
Technology Select Sector SPDR Fund (NYSE:XLK)	Technology	1.9%	2.3%
iShares Silver Trust (NYSE:SLV)	Silver	1.7%	2.4%
Invesco QQQ Trust (NASDAQ:QQQ)	Nasdaq 100	1.7%	1.7%
Consumer Discretionary Select Sector SPDR Fund (NYSE:XLY)	Discretionary	1.6%	1.0%
iShares Russell 2000 ETF (NYSE:IWM)	Russell 2000	1.5%	0.3%
SPDR S&P 500 ETF Trust (NYSE:SPY)	S&P 500	1.2%	0.9%
Vanguard S&P 500 ETF (NYSE:VOO)	S&P 500	1.2%	0.9%
Financial Select Sector SPDR Fund (NYSE:XLF)	Financial	1.1%	0.7%
SPDR Gold Shares (NYSE:GLD)	Gold	0.9%	1.4%
iShares J.P. Morgan USD Emerging Markets Bond ETF (NASDAQ:EMB)	EM Bond	0.8%	0.6%
iShares iBoxx $ High Yield Corporate Bond ETF	HY Corp Bond	0.6%	0.3%
iShares iBoxx $ Investment Grade Corporate Bond ETF	IG Corp Bond	0.6%	0.7%
iShares 7-10 Year Treasury Bond ETF (NASDAQ:IEF)	7-10 Year Treasury	0.6%	0.7%
iShares TIPS Bond ETF (NYSE:TIP)	TIPS Bond	0.5%	0.4%
Average		1.5%	1.3%

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