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Stocks From Wining Sectors As Fed Turns Hawkish


The Fed enacted its second-rate hike of this year and signaled the possibility of two more hikes this year, raising worries of rising rates. The federal funds rate projections were upped to 2.4% from 2.1% for 2018 and to 3.1% from 2.9% for 2019, while it remained the same for 2020. The Fed chair Powell also lauded the economy’s improving health.

Over the longer term, the rate is projected to be 2.9%, same as that of March projections. Thanks to such projections and activity, the yield on the 10-year U.S. Treasury increased to 2.98% on Jun 13 from 2.96% recorded the day earlier. And the two-year U.S. Treasury yield rose to the highest since 2008 to 2.59%.

The initial reaction to the latest Fed meeting was the slump in Wall Street. Fears of gradual cease in cheap money inflows put a brake on the market momentum. However, not all sectors should be apprehensive of rising rates.

Winning Sectors

A rising rate environment is beneficial to cyclical sectors like consumer discretionary, technology and industrials. This is because signs of steady recovery in the U.S. economy are now pretty evident, thanks to a solid labor market, manufacturing activity and retail sales. Decent inflation, President Trump’s fiscal reflation and stabilization in the oil patch should translate into a rally, at least in those specific sectors.


The technology sector is on a tear lately. Emerging new technologies like cloud computing, big data and Internet of Things are expected to drive the sector. In this regard, we highlight a tech stock here.

MKS Instruments Inc. (MKSI)

The Zacks Rank #2 (Buy) company is a global provider of instruments, subsystems, and process control solutions. The stock belongs to a top-ranked Zacks industry (top 3%) and has a VGM (Value, Growth, Momentum) Score of A.

Consumer Discretionary

A raft of upbeat economic data, rising income levels and a solid U.S. market reignited optimism in the consumer discretionary space. The U.S. economy is the strongest now since the last recession. The Fed has also raised the real GDP growth forecast for 2018 from 2.7% in March to 2.8%. Meanwhile, the unemployment rate dived to an 18-year low, giving consumers confidence to splurge on discretionary items. So, one can bet on the following stock.

Weight Watchers International Inc. WTW

This Zacks Rank #1 company is one of the largest providers of weight control programs in the world. The stock belongs to a top-ranked Zacks industry (top 11%) and has a VGM Score of B.


An industrial boom is apparent in the U.S. economy due to the narrowing wage differential between developed and emerging economies, moderate strengthening of the U.S. dollar against a basket of emerging currencies and President Trump’s efforts to bring back manufacturing jobs to America.

DMC Global Inc. (BOOM)

This Zacks Rank #1 technology company’s operating sector consists of industrial infrastructure and oilfield products and services. The stock hails from a top-ranked Zacks industry (top 9%) but has a VGM Score of D.

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