For investors looking to play the anticipated rate cut, here are the sectors that have done well in the past when the Federal Reserve embarked on easing cycles.
CNBC analysis using Kensho, a hedge fund analytics tool, found the top-performing sectors in the six months after the first Fed rate cut in each cycle going back to 1990.
An "insurance" rate cut seems like a done deal to traders this week, soon to mark the first reduction since the financial crisis by the Federal Reserve. For investors looking to play the anticipated cut, here are the sectors that have done well in the past when the Fed embarked on easing cycles. Materials and industrials both returned nearly 9% on average in the six months after the initial rate cut as cyclical sectors tend to react quickly to lower rates and expectations for it to jolt the economy. It's also no surprise that the consumer sector did well as lower borrowing costs spur spending. Both consumer discretionary and staples rose more than 7% after the Fed trimmed rates.Tech is one sector to avoid after a Fed rate cut if history is any guide.
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