Fed Goes Big! What Should You Buy NOW?

In a surprising move, the Federal Reserve announced a 50-basis point cut to interest rates during its September 2023 meeting, the first reduction since 2020. This decision was made in response to economic conditions and signals that the Fed may continue to lower rates into 2025. The cut is expected to have significant implications for various sectors of the economy, particularly those sensitive to interest rates, such as real estate and utilities. The Real Estate Select Sector SPDR Fund saw a notable increase of 17.3% over the past three months, while the SPDR Gold Shares ETF rose by 10.6%. These trends suggest that lower interest rates typically benefit bonds, gold, and rate-sensitive stocks, while simultaneously putting downward pressure on the value of the US dollar. As a result, investors are encouraged to consider stocks that may thrive in this environment. Among the recommended stocks are M/I Homes Inc., which is seen as an attractive investment opportunity due to its underfollowed status on Wall Street and the potential for growth as interest rates decline. Additionally, Centrus Energy Corp. is highlighted as a promising nuclear power play, with increasing demand for processed uranium. Overall, the Fed's decision to cut rates is expected to support the market and create favorable conditions for certain sectors, prompting investors to reassess their strategies and consider new opportunities in the evolving economic landscape.