Investing.com -- In a note to clients on Friday, Barclays examined how the S&P 500 has historically performed around instances where the Federal Reserve reverses an easing cycle and resumes rate hikes, finding limited evidence of headwinds beforehand but a tendency toward muted returns afterward.

Analyst Venu Krishna noted that markets are now pricing the resumption of Fed hikes around year-end, following the latest inflation prints.

Barclays identified five notable instances over the last several decades where the Fed has reversed easing, defined as a cutting cycle followed by a period of holding rates steady, followed by the resumption of hikes.

In most of these cases, Barclays found that the impending reversal "was not a major headwind for S&P 500 returns over the 6 months leading into the event."

However, the picture shifted following the first hike itself. Barclays said equity market performance after that point "was typically quite muted, averaging low-single-digit downside," with a downside hit rate ranging between three and four instances out of five over a window spanning two weeks to three months after the hike.

The findings come as investors weigh the prospect of a renewed hiking cycle following stronger-than-expected inflation data.

Barclays' historical analysis suggests that while the lead-up to such a shift may not derail equity performance, the period immediately following the first hike has historically posed a higher risk of pullbacks for the S&P 500.