Interest Rate Sensitivity in the U.S. Stock Market: Winners and Losers

As the U.S. Federal Reserve signaled its intention to begin cutting interest rates, Sismo and InFi Strategies analyzed the Russell 1000 to identify sectors and stocks most likely to benefit or struggle in a falling-rate environment. Using Sismo’s visual analytics, the study examined 10-year returns, correlations, and multi-factor regressions against U.S. 10-Year Treasury yields.

Highlights:

• Sectors benefiting from falling rates: Real Estate, Utilities, Consumer Staples
• Sectors thriving in rising rates: Financials (especially Banks), Energy, Materials
• Growth-driven tech sectors, such as Semiconductors, outperformed across rate environments, fueled by structural demand for computing power and innovation.
• Large banks like JPMorgan Chase and Bank of America show high positive beta to interest rates, gaining in rising-rate periods but facing margin compression when rates fall.
• Defensive sectors like Real Estate and Utilities, with high debt loads and dividend-focused models, benefit most from lower borrowing costs.

Why It Matters:
Understanding sector-specific sensitivity to interest rates helps investors position portfolios ahead of monetary policy shifts. The analysis provides a roadmap for both defensive positioning when rates fall and growth capture when rates rise.

‍Read the full report by Jodie M. Gunzberg, CFA, and Emmanuel Dayan: View PDF