Certain stocks should be winners as the Federal Reserve seeks to lower short-term rates, if history is any guide. The Federal Reserve on Wednesday kept rates unchanged as expected and noted progress it was making on inflation. Traders are betting the central bank is preparing markets for a rate cut at its next meeting in September. Short-term yields have been falling this week in anticipation of this Fed action. The 2-year Treasury yield is down about 6 basis points this week (1 basis point equals 0.01%). The 2-year yield is down to 4.38%, from above 5% at one point this year. CNBC Pro screened for the stocks in the S & P 500 that tend to rise the most when short-term rates decline. These stocks could be winners if short-term rates continue to decline in the near future. We looked at the largest one-week declines in the 2-year Treasury yield over the last 12 months. The following stocks had the biggest median move during those weeks. We also scrubbed the list to take only stocks that were consistent winners — gaining during each of those weeks of falling yields. The majority of stocks have businesses that would benefit from lower rates. Camden Property Trust , an apartment REIT, is among the single most consistent winners when rates decline. Many stocks from the list have links to the housing sector including: Builders FirstSource , Home Depot , PutleGroup , Lowe’s , and Carrier . There are also generally volatile names that would benefit from lower rates increasing risk-taking by investors. Put Palo Alto Networks , Monolithic Power Systems and Qualcomm in that camp, among others.
