With the Federal Reserve increasingly likely to cut interest rates by up to 50 basis points at its policy meeting on Sept. 18, some investments may be poised to rally, or at least hold up better than others in a market correction.
“To understand how rates affect these asset classes, we have to first understand the benchmark rate set by the Fed. Lowering that rate makes it easier for institutions to borrow money because it eases the money supply,” says Kevin Chancellor, CEO and financial advisor at Black Lab Financial Services in Melbourne, Florida.
Broad market sentiment tends to lift stocks after a rate decrease, but Chancellor notes that lower rates affect some sectors more favorably than others.
Here are some sectors and types of stocks to add if interest rates decline.
This post originally appeared at U.S. News & World Report.