10 Best Stocks to Benefit from Interest Rate Cuts and Profit in this Bull Market
Lowering Interest Rates and Their Impact on Stocks
It is now clear that we have entered a new era marked by a series of consecutive interest rate cuts by the Federal Reserve, which is almost certain.
For the first time since March 2020, the federal funds rate has been lowered by 0.5%, double what many economists had anticipated. Interestingly, this isn't the end of the story.
The Federal Reserve is expected to continue cutting rates throughout this year and into 2025, with the federal funds rate predicted to drop to 3.4% by the end of next year.
But how might stocks react during such a period?
In theory, lower interest rates should boost stock prices, as lower borrowing costs allow companies to retain more profits from their sales.
Additionally, rate cuts enhance the appeal of stocks compared to bonds, as bond yields decrease when bond prices rise (bond yields move inversely to bond prices).
This article will highlight the best sectors and stocks that might benefit from rate cuts, with the likelihood of further reductions this year and into 2025.
In a low-interest-rate environment, certain stocks and sectors that have underperformed might start to outshine the large-cap tech stocks that have been investor favorites in recent years.
Real Estate and REITs (Real Estate Investment Trusts)
The real estate sector and REITs stand to benefit the most from lower interest rates in two ways: companies often expand by purchasing and developing real estate through loans, while individuals are incentivized to buy homes due to lower mortgage costs.
Some of the best stocks in this area include:
- D.R. Horton, Inc. (DHI)
| Market Cap | PE Ratio | Current Stock Price | Analysts’ Avg. Price Target |
|---|---|---|---|
| $62.53 billion | 12.89 | $191.89 | $214.63 |
- National Storage Affiliates Trust (NSA)
| Market Cap | PE Ratio | Current Stock Price | Analysts’ Avg. Price Target |
|---|---|---|---|
| $3.69 billion | 29.39 | $48.57 | $57.14 |
- Realty Income Corporation (O)
| Market Cap | PE Ratio | Current Stock Price | Analysts’ Avg. Price Target |
|---|---|---|---|
| $53.67 billion | 57.89 | $61.53 | $63.90 |
Consumer Goods and Discretionary Goods Sector
The consumer goods and discretionary goods sectors also benefit from lower interest rates, especially when it comes to big-ticket items like cars and luxury goods.
- General Motors Company (GM)
| Market Cap | PE Ratio | Current Stock Price | Analysts’ Avg. Price Target |
|---|---|---|---|
| $54.94 billion | 5.55 | $48.88 | $54.57 |
- Honda Motor Co., Ltd. (HMC)
| Market Cap | PE Ratio | Current Stock Price | Analysts’ Avg. Price Target |
|---|---|---|---|
| $51.25 billion | 7.24 | $32.72 | $35.00 |
Energy Sector
Lower interest rates can help boost economic growth and raise crude oil prices, making the energy sector one of the best options in this environment.
- Exxon Mobil Corporation (XOM)
| Market Cap | PE Ratio | Current Stock Price | Analysts’ Avg. Price Target |
|---|---|---|---|
| $512.12 billion | 13.80 | $115.27 | $134.00 |
- ConocoPhillips (COP)
| Market Cap | PE Ratio | Current Stock Price | Analysts’ Avg. Price Target |
|---|---|---|---|
| $127.59 billion | 12.22 | $109.87 | $142.60 |
Healthcare Sector
The healthcare sector also benefits from lower interest rates as hospitals and healthcare companies can finance expansion projects and purchase medical equipment at lower costs.
- UnitedHealth Group Incorporated (UNH)
| Market Cap | PE Ratio | Current Stock Price | Analysts’ Avg. Price Target |
|---|---|---|---|
| $530.97 billion | 37.99 | $575.00 | $605.83 |
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The expected trading range for today is between 2530.00$ support and 2750.00$ resistance.
Trend forecast: Bullish
Bitcoin price (BTCUSD) forecast update - 25-09-2024
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The bullish channel organizes the suggested bullish wave, noting that breaking 62675.00$ will push the price to turn to decline and head to test the key support 60326.70$ before any new attempt to rise.
The expected trading range for today is between 63000.00$ support and 66500.00$ resistance.
Trend forecast: Bullish
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The expected trading range for today is between 22.80$ support and 23.80$ resistance
Trend forecast: Bullish