Most (if not all) of the market is now riding on the narrative that the Federal Reserve will implement up to three rate cuts before 2025 is over. Investors all around are betting that the past will repeat itself in these rate cuts, sending stocks higher. While this may be true, it seems that the broader S&P 500 and Nasdaq-100 indexes have priced in some of this narrative in today’s prices.
However, other names in the market will likely benefit more aggressively if these cuts make their way into the United States economy. Fundamentally, investors can look at stocks that have a bigger debt load in their balance sheets (as long as it is not an irresponsible level of debt), since lower interest rates could greatly decrease the amount of interest these companies pay, directly boosting bottom-line earnings.
