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If history is any guide, certain stocks should be winners as the Federal Reserve seeks to lower short-term interest rates. The Fed left interest rates unchanged on Wednesday, as expected, and noted progress in controlling inflation. Traders are betting the central bank is preparing to cut rates at its next meeting in September. Short-term yields have been falling this week in anticipation of the Fed’s move. The 2-year Treasury yield fell about 6 basis points this week (1 basis point equals 0.01%). The 2-year yield fell to 4.38% from more than 5% at one point this year. CNBC Pro screened the S&P 500 stocks that have risen the most when short-term rates have fallen. If short-term rates continue to fall in the near future, these stocks could be winners. We looked at the stocks that had the biggest weekly declines in the 2-year Treasury yield over the past 12 months. The following stocks had the largest median gains during those weeks. We also filtered the list to only those stocks that have been rising consistently – rising every week that yields have fallen. Most of the stocks are in businesses that would benefit from lower interest rates. Apartment real estate investment trust Camden Property Trust is one of the most consistent winners when interest rates fall. Many other stocks on the list are also related to the real estate industry, including: Builders FirstSource, Home Depot, PutleGroup, Lowe’s and Carrier. There are also some often volatile stocks that benefit from lower interest rates, thereby increasing investors’ risk tolerance. Put Palo Alto Networks, Monolithic Power Systems and Qualcomm in this camp.
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