Federal Reserve chair Jerome Powell has signaled that interest rate cuts are on the horizon, amid a cooling labor market marked by fewer job additions and rising unemployment.

Today, the benchmark interest rate stands at 5.25- 5.50%, up from near-zero levels in 2022. Historically, equities have performed better after gradual rate cuts compared to swift reductions typically seen during economic crises. Sectors of the economy are also impacted in different ways, due to shifting consumer demand and interest rate sensitivity.

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

Ranked: Sector Performance During Rate Cut Cycles

Below, we show the average performance of each sector relative to the broad equity market 12 months after the first rate cut between 1973 and 2024:

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