Here are the stocks that win when the Fed cuts rates with no recession

September 16

As investors gear up for this week’s Federal Reserve meeting, CNBC Pro found stocks that have historically done well when rates are cut without a recessionary environment. Fed funds futures have fully priced in that the central bank will lower interest rates, according to CME’s FedWatch tool . The question now is how big that decrease will be Despite me concerns about slowdowns in consumer spending and the white-collar job market, the economy has held up through this monetary policy tightening cycle. Many now expect the Fed will achieve the coveted “soft landing” outcome, which means inflation is curbed without tipping the economy into a recession. Rate cuts without a recession has historically been a positive mixture for stocks. Canaccord Genuity found the S & P 500 gained more than 18.5% on average in the one year after the Fed’s first decrease when there’s no recession. When including situations with a recession, that increase slid to just over 11%. Given this backdrop, CNBC Pro screened for names that have performed nicely in past periods where the Fed pulled rates lower without the U.S. economy tipping into a recession. To find these companies, CNBC Pro searched the S & P 500 for members with the highest median gain one year after the Fed has cut rates without an official recession. Here are the top 10 gainers: Nike led the way by median gain, topping 87%. That could mark a turn after a hard year , with the athletic retailer’s shares down more than 27% in 2024. This performance has made it the third worst performing member of the Dow Jones Industrial Average year to date, behind just Intel and Boeing . The average analyst polled by LSEG has a buy rating. However, they expect a far more muted upside of around 15.5%. Walmart also made the list with a median rally of nearly 51%. The retailer is the best-performing Dow member for 2024 with a 53% surge. Following that monster run, the typical analyst surveyed by LSEG sees the stock sitting around flat over the next year. Still, they have a buy rating on shares. Citi reiterated its top pick designation last week, an honor the stock has held for more than 2 years. Like the majority on Wall Street, the firm also has a buy rating. “Although execution has been strong, [management] highlighted many opportunities for improvement (we shouldn’t think of them as comfortable), which we believe will be part of the WMT story for years to come,” analyst Paul Lejuez wrote to clients. WMT NKE YTD mountain Walmart vs. Nike, year to date Paychex is a lesser-known name that passed the screen. The human resources platform provider has climbed 51.5% in the median 12-month period following the first cut without a recession. The Rochester, New York-based company is rated at hold by the majority of analysts, according to LSEG. After climbing almost 14% this year, Wall Street expects the stock to slide more than 10% over the next 12 months.

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