As investors prepare for this week’s Federal Reserve meeting, CNBC Pro found stocks that have historically performed well when interest rates are lowered in a recession-free environment. According to CME Group’s FedWatch tool, federal funds futures are fully priced in for the central bank to lower interest rates. The question now is how deep the decline will be. Despite concerns about a slowdown in consumer spending and the white-collar job market, the economy has remained stable in this cycle of monetary policy tightening. Many now expect the Fed to achieve the coveted “soft landing” outcome, meaning inflation is contained without tipping the economy into recession. Historically, lowering interest rates in the absence of a recession has been a positive combination for stocks. Canaccord Genuity found that in the absence of a recession, the S&P 500 rose an average of more than 18.5% in the year after the Fed’s first rate cut. When recessionary conditions are taken into account, this increase slips to just over 11%. With that backdrop in mind, CNBC Pro screened for companies that have performed well during this past period when the Federal Reserve cut interest rates but the U.S. economy didn’t slip into recession. To find these companies, CNBC Pro scoured the S&P 500 for companies with the highest median gains one year after the Fed cut interest rates without an official recession. Here are the top 10 gainers: Nike (Nike) led the way with a median gain of 87%. That could mark a turnaround after a difficult year that saw the athletic retailer’s stock drop more than 27% in 2024. at Intel and Boeing. Analysts surveyed by London Stock Exchange Group (LSEG) gave the stock an average buy rating. However, they expect the increase to be much smaller, around 15.5%. Walmart also made the list with a median gain of nearly 51%. The retailer was the best-performing Dow Jones stock in 2024, with shares soaring 53%. After this wild rally, typical analysts surveyed by LSEG believe the stock will be flat next year. Still, they have a buy rating on the stock. Citi last week reiterated its top stock designation, an honor the stock has held for more than two years. Like most on Wall Street, the company has a buy rating. Analyst Paul Lejuez wrote in a note to clients: “While execution was strong, (management) highlighted a number of opportunities for improvement (which we should not be comfortable with), which we believe will serve as WMT’s next few years.” Part of the story. WMT NKE YTD Mountain Walmart vs. Nike, YTD Paychex is a little-known name, but it’s showing up on the silver screen after its first downturn without a recession. It’s up 51.5% in the median 12 months. Most analysts have a hold rating on the Rochester, New York-based company this year, according to LSEG. % later, Wall Street expects the stock to fall more than 10% over the next 12 months.
