D-Day is approaching for the markets, as a two-day FOMC meeting begins this Tuesday, with a key rate announcement tomorrow. The market is a rate cut with a high degree of certainty, with some even speculating on a “double” rate cut, not of 25, but of 50 basis points.
In response to these expectations, the S&P 500 has been setting record highs in recent days, with a new all-time high closing on Monday at 6,615.28 points. Investors are likely already factoring in the rate cut.
However, the Fed still has room to boost the markets. Investors expect more rate cuts before the end of the year, and confirmation from the Federal Reserve, even half-heartedly, could fuel the market rally.
News about the trade war could also support a more substantial rise in the S&P 500 and other indexes, as President Donald Trump said late Monday that trade talks between the United States and China were progressing well, and that a meeting with Chinese President Xi is scheduled for Friday.
The best S&P 500 stocks to profit from the Fed’s rate cut
With that in mind, we tried to identify the best S&P 500 stocks to keep on your radar for a post-Fed rally, using the Investing.com screener.
Note: The screener and its basic features are free to all Investing.com users. However, some metrics, including those we use in this article, are reserved for InvestingPro and Pro+ members. Click here to subscribe.
Specifically, we focused on the most undervalued stocks in the index, which also exhibit strong financial health and pay dividends yielding more than 3%. Indeed, with a Fed rate-cutting cycle about to begin, dividend stocks should become increasingly sought after.
Here’s what that looks like in terms of search criteria on the Investing.com screener:
InvestingPro’s Fair Value calculates a smart average of several recognized valuation models for each stock on the market. The Health Score, meanwhile, uses several key financial metrics and peer comparisons to assess the financial strength of companies.
This fairly precise research currently allows us to identify 9 stocks:
These stocks show an upward potential of +31.3% to +52.1% according to InvestingPro Fair Value, and their dividend yield ranges from 3.5% to 7.2%. Most also display a particularly high health score, around 3/5.
These are more stocks from a variety of sectors and capitalizations, which makes this list a source of interesting opportunities for investors of all profiles.
If you’re not already an InvestingPro member and want to see the full list, you can take advantage of a limited-time discount by clicking on the button below:
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Finally, the features discussed in this article are far from the only InvestingPro tools useful for market success. InvestingPro offers a comprehensive range of tools that enable investors to know how to react in the stock market, regardless of the conditions. The list of features is as follows:
- AI-managed stock market strategies re-evaluated monthly
- 10 years of historical financial data for thousands of global stocks
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- Subscriber-only analysis and stock selection articles, in which our analysts “do the work for you” and offer turnkey stock selections
- And many other tools that help tens of thousands of investors outperform the market every day!
