One exception, fresh in the minds of investors, is the hiking cycle that began in March 2022, when stocks eventually endured a bear market. That year, the S&P 500 dropped 25% from its peak, hitting its low about seven months after the first hike.
Calvasina and other market analysts draw distinctions between the 2022 environment and other periods, including the current one. That year involved fears of a recession and a particularly aggressive hiking cycle, analysts said.
"It was the magnitude of hikes in 2022 that spooked the market," said Sam Stovall, chief investment strategist at CFRA.
The current hiking cycle is expected to be relatively short and shallow. Fed funds futures as of Wednesday suggested the rate will peak at around 4.8% in a little over a year, for total hiking of just over 100 basis points, or one percentage point, according to LSEG data. Since 1983, the average rate hike cycle has lasted just under two years, with rates rising 320 basis points, according to Jane Gibbons, an equity strategist at Jefferies. In the 2022-2023 cycle, the Fed hiked by 525 basis points.
The current hiking trajectory "feels like a mid-cycle adjustment that still can be absorbed from a growth perspective and hopefully labor market perspective," said Mona Mahajan, head of investment strategy at Edward Jones.
After initial slides during past hiking cycles, stocks have tended to recover relatively quickly. A year after the first rate hike, the S&P 500 was 6.8% higher, on a median basis, with the index positive a year out in each cycle except for 2022-2023, LPL said.
"Historically, stocks do get a little jittery initially after the hiking cycles start," said Jeffrey Buchbinder, chief equity strategist at LPL Financial. "Then they tend to calm down and return to the fundamentals of economic and earnings growth."
Higher rates can unearth or contribute to vulnerabilities in the economy that had not been evident. Although stocks were higher a year after the start of the 1999-2000 cycle, the rate hikes during that time could have exacerbated the severe market slide once the Internet bubble burst in the early 2000s, investors said.
With the latest hike, the market's recent modest performance could mitigate any declines. The index was little changed in the three months prior to last week's move, compared to average gains of 4.2% in the three months ahead of initial hikes historically, said Jeff Schulze, head investment strategist at the Franklin Templeton Institute.
"I think the market is poised to continue to melt higher into a very strong seasonally fourth quarter," Schulze said.
UBS' Lefkowitz plans to closely watch the ISM manufacturing index, in particular the new orders component, as he looks at economic indicators to gauge the stock-market fallout from the hiking cycle.
"The market is just going to be much more sensitive to both the growth and the inflation data," he said.
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