The chart illustrates the performance of various sectors relative to the broad equity market 12 months after the first rate cut. Notably, consumer non-cyclicals lead with a significant positive performance of 7.7 percentage points above the market average, followed closely by consumer cyclicals and technology sectors. These sectors appear to benefit from rate cuts, possibly due to increased consumer spending and technological investments. In contrast, sectors like finance, utilities, and energy show negative performance, with finance experiencing the steepest decline at -8.2 percentage points. This trend may reflect the adverse impact of rate cuts on interest-sensitive sectors, where lower rates can compress margins and reduce profitability. The data suggests a clear divergence in sectoral performance, highlighting the importance of strategic sector allocation in investment portfolios following rate cuts. The average S&P 500 return one year after the first interest rate cut since 1973 is 4.9%, indicating that while some sectors outperform, others may lag significantly, underscoring the nuanced impact of monetary policy changes on different industries.
