Three Stock sectors that are the direct beneficiaries of the interest rate cut.

• Changes in the interest rate usually impact the stock market immediately and its effect on the economy may take about a year.
• A drop in interest rate tends to lift the stock market but is not equal across the board.
• The Fed believes GDP growth remains solid with the labor market appearing healthy and inflation trending back to 2%.
• The Summary of economic projections (SEP) points to another 50 basis points of cuts in 2024, and another 100 basis points in 2025.
• FOMC believes interest rates will stabilize in 2026.

There are going to be much more interest rate cuts at least to the end of 2025 and here are the three sectors that would benefit the most from the multiple rate cuts:

1. Financial sector –> Banks' lending and refinancing activities ramp up with the falling interest rates. Banks, insurance companies, and mortgage lenders also benefit from borrowing more money at lower rates. The lending default rate significantly drops with cheaper refinancing and an improving economy.
2. Technology sector –> Technology stock valuations are heavily dependent on their future earnings which directly benefit from decreasing interest rates. A lower borrowing cost is critical to the growth of tech companies.
3. Real Estate sector –> Mortgages become more affordable which would lead to a rise in demand for properties, and increase profitability of real estate investments.