Stocks will likely get a modest short-term boost from what would be the first Federal Reserve interest rate cut since the Financial Crisis.
 | TUE, JUL 30, 2019 | | | | DOW | | NAME | LAST | CHG | %CHG | | PFE | 38.79 | -2.66 | -6.42% | | AAPL | 208.78 | -0.90 | -0.43% | | PG | 120.41 | +4.41 | +3.80% | |
| | S&P 500 | | NAME | LAST | CHG | %CHG | | PFE | 38.79 | -2.66 | -6.42% | | AMD | 33.87 | +0.39 | +1.16% | | GE | 10.52 | +0.14 | +1.35% | |
| | NASDAQ | | NAME | LAST | CHG | %CHG | | AMD | 33.87 | +0.39 | +1.16% | | SIRI | 6.18 | +0.02 | +0.32% | | AAPL | 208.78 | -0.90 | -0.43% | |
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If history is any indication, stocks will likely see a modest short-term boost from what would be the first Federal Reserve interest rate cut since the financial crisis. CNBC used Kensho, a hedge fund analytics tool, to look at stocks that tend to pop on the day the central bank pulls the trigger. On average, the Dow Jones Industrial Average climbed 0.7% on rate cut day. Procter & Gamble takes the cake as the best-performing stock in the index on decision day, rising 2.2% on average, CNBC's Yun Li reports. Caterpillar and 3M both jumped nearly 1.9% when the Fed lowered interest rates for the first time in a long while.  But history shows some longer-term upside, too. Data from Strategas shows annualized returns for the S&P 500 between the first rate cut and the next hike have been 20%, with a median increase of 13%. The data backs up the old saying "don't fight the Fed." Put another way: Investors would do well if they invest in a way that aligns with the Federal Reserve's policy direction, rather than against it. One person not backing away from a fight with the Fed is President Donald Trump. He kept up the pressure on the central bank Tuesday, calling for a substantial interest rate cut. Trump said he thinks that the Fed should have acted sooner to lower rates, and that the economy would have been better off without the rate hikes that began in December 2015. But history might not repeat itself, and the Fed could still surprise markets when it announces its latest decision on whether to adjust interest rates at 2 p.m. ET on Wednesday. Have friends or colleagues who might like this newsletter? Tell them they can sign up for CNBC's Evening Brief here. |
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