UBS said a rate cut by the Federal Reserve would boost these stocks. The central bank is scheduled to release its latest policy decision at 2 pm Eastern Time on Wednesday, and the market expects a half-percentage point interest rate cut to be the most likely outcome. The CME FedWatch tool last showed a 59% chance of a 50 basis point rate cut. Investors expect the move will ease pressure on companies that have been grappling with rising borrowing costs and inflation and boost their profits. UBS strategist Patrick Palfrey identified stocks that have historically outperformed when the Fed cut rates, a move he expects will particularly benefit smaller, more volatile and more efficient stocks. low company. He expects this to be true for both large- and small-cap stocks, represented by the S&P 500 and Russell 2000. “Our research shows that when interest rates fall, stocks with higher price volatility and lower returns on equity tend to Outperformed,” Palfrey wrote on Wednesday. “Smaller companies also benefit the most, with small-cap stocks outperforming others on rate cut days.” Here are the five S&P 500 stocks that UBS expects to benefit the most. KeyCorp stands to benefit from rate cuts. The Cleveland, Ohio-based regional bank has seen its shares rise 15% through 2024 after struggling last year amid the regional banking crisis. In comparison, the SPDR S&P Regional Banking ETF (KRE) is up more than 8% year to date. The stock is considered a buy, with 5 out of 22 analysts calling it a buy, according to the CNBC Analyst Consensus Tool. Dollar Tree appears on the list. The discount chain has been under pressure recently after it lowered its full-year forecast earlier this month due to weakness among middle- and upper-income consumers. Dollar Store shares have nearly halved this year. Moderna also appears on this list. Here are five Russell 2000 stocks that could benefit. Perpetua Resources’ name fits the profile UBS is looking for. The exploration and development company, which mainly acquires mineral properties in Idaho, has soared 180% this year. However, Bank Negara Financial initiated an outperform rating on Perpetua Resources earlier this month. CNBC’s Analyst Consensus Tool shows the stock is unanimously Buy, with an average price target of $13.50, implying upside potential of more than 50%. Electric vehicle charging station company Blink Charging and online consignment store ThredUp also appear on the list.
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