How Do Sectors Perform After the First Rate Cut? 📈

What We’re Showing

This graphic breaks down sector performance after the first interest rate cut, based on data from PinPoint Macro Analytics.

Figures represent the average performance of each sector relative to the broad equity market 12 months after the first rate cut between 1973 and 2024.

Key Takeaways

• As a traditionally defensive sector, consumer non-cyclicals have the strongest returns after the first rate cut, particularly during recessions, due to consistent demand for consumer staple goods
• Historically, the tech sector underperforms the market six months after the first rate cut, but performance bounces back over a 12 month period
• Financials experienced the weakest performance, since interest rate cuts often signal that the economy is slowing, putting pressure on loan growth, credit losses, and default risk