In CNBC’s article “Stocks to buy when the Fed starts cutting interest rates, according to Jefferies,” Pia Singh quotes Desh Peramunetilleke, Jefferies’ global head of quantitative strategy, saying, “The recent market turmoil is a clear message to the Fed that investors are primed for rate cuts,” As investors get ready for the possibility of the Federal Reserve cutting interest rates at its upcoming September meeting, Jefferies has pointed out several stocks that could benefit from this change. The expectation of this rate cut, the first in over four years, has already helped major U.S. indexes bounce back a bit, calming some of the market’s earlier volatility in August. Investors are closely watching for the minutes from the Federal Reserve’s July meeting and Chair Jerome Powell’s upcoming speech at Jackson Hole to gain insights into the Fed’s economic view and its potential influence on the decision to lower rates.
Desh noted that the recent market swings show investors are ready for a rate cut, especially if the economy manages a “soft landing.” With this in mind, Jefferies suggests focusing on value stocks in sectors like automotive, energy, telecommunications, and banking, which are expected to do well in such situations. To find good investment opportunities, Jefferies looked for companies with market capitalizations above $2 billion that have a track record of performing well when rate cuts were expected and economic growth was anticipated. These companies also needed to have attractive valuations and strong earnings momentum.
Among the stocks Jefferies highlighted are JPMorgan Chase, Alphabet, and Owens Corning. JPMorgan Chase, the largest bank in the U.S., has seen its share price rise by 26% this year, with more room for growth. Alphabet, despite challenges like a legal case that could lead to a breakup, remains a strong pick due to its role in the fast-growing artificial intelligence sector. Owens Corning, which saw a drop in its share price after missing revenue targets, is still expected to see significant growth, making it an attractive option in a stable economic environment. These stocks represent the kind of investments Jefferies believes will thrive if the Federal Reserve goes ahead with the expected rate cuts, especially if the economy stays on track.
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