The US stock market has surged in the last two days after the Federal Reserve lowered its benchmark rate of interest by 50 basis points.
The Fed has cut rates for the first time in four years. This signals an accommodative policy, and a further 50 basis points is expected by the end of this year.
Low interest rates boost the stock markets, because they lower borrowing costs, which encourages investment, growth, and potential higher profits.
Analysts at Jefferies, however, have identified three stocks with a high rate of sensitivity that will benefit the most as the monetary policy continues to be loosened, especially if rates continue to fall in the months to come.
Take a look at the stocks below and see why they might be good investments in 2025.
JPMorgan Chase & Co (NYSE: JPM)
Jefferies’ top choice is JPMorgan Chase, which will benefit from recent Federal Reserve rate reductions.
JPMorgan Investment Banking and Wealth Management are likely to benefit from lower interest rates.
JPMorgan may see the potential for significant gains as the Fed’s rate reduction raises hopes of a softer landing.
Jefferies sees JPMorgan as a good investment despite its strong year-to date performance. The stock is trading with a P/E ratio under 12
JPMorgan is a good option to invest in long-term growth because of its solid dividend yield.
Alphabet Inc (NASDAQ: GOOGL)
Alphabet is the parent of Google and another big beneficiary of low interest rates. This applies to large-cap technology stocks.
Jefferies says that Alphabet, currently down 15% since its high in July, offers investors a rare opportunity to purchase a quality tech stock for a discounted price.
Alphabet will have more financial flexibility with lower rates to invest in Artificial Intelligence (AI), which Statista predicts will be a $1 trillion industry by 2030.
Alphabet recently introduced its first ever dividend as well as a stock-buyback program of $70 billion, which further increased its appeal to investors.
Owens Corning (NYSE: OC)
Owens Corning is a manufacturer of composite fiberglass based in Ohio. It’s expected to prosper under low interest rates.
Jefferies believes that lower mortgage rates will lead to a renewed interest in the housing sector, which is expected to boost demand for roofing and composites, including fiberglass.
Owens Corning’s quarterly earnings exceeded expectations in August and the company projected a growth of over 20% on a year-over-year basis for net sales during the third quarter.
The outlook is a sign of confidence for the future.
Owens Corning offers a dividend yield of 1.35 %, which makes it a good choice for investors who are sensitive to interest rates.
These three companies, JPMorgan Chase Alphabet and Owens Corning, are well positioned to benefit from lower interest rates as the Federal Reserve shifts towards a more accommodating stance.
These companies are likely to be valuable investments for any portfolio in 2025. They have strong fundamentals and attractive valuations.
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