There is always uncertainty around Fed announcements and even though the probability markets have a rate hike predicted at above 90%, how the market will react is still the big question. So do you jump in this morning and try and trade it or do you sit back like the second mouse waiting to get the cheese?

Here is a list of the sectors commonly impacted by Fed news and what they look like today.

Financial Sector

Traditionally, hikes are good for lenders as it boosts interest income, but many things have changed since that rule of thumb came to be. Fee make up a healthy chunk of banking revenue and with high inflation and higher rates consumers are shopping hard for deals that favor lower fees. Also, with the housing market significantly cooled, higher rates will most likely send that temp lower. Expect some chop out of this area over the next couple days as the markets try to sort it out.

Energy and Oil

This sector has also been known to rise when rates go up but in the current environment it really doesn’t need an excuse. The one exception (as we have seen following OIH) is oil producers who are having a tough time managing how the new oil reality is going to impact costs and logistics. All in all, this looks to rise regardless of the new on rates today.

Mining and Materials

Since this group is very far up the food chain and is known for exploiting its leverage when inflation is rising. A hike would only boost that. But just like oil, the logistics of running business profitably is facing unique challenges right now. This is one to sit and watch before jumping in to a rate decision grinder.

Gold

An old go-to when markets get ugly, it just isn’t that simple this time. With Treasury Yields through the roof, safe haven hunters have choices.

Technology

The big tech darlings may see a lift from a hike but they have their own quagmire to navigate right now. This is another area that will see chop and could easily carve away your profits if you aren’t super confident in your trades.

The big take away from researching what to expect from today’s news is that the old adages simply don’t apply anymore. If there is any sliver of doubt in your trades, sit this out.

Keep learning and trade wisely,

John Boyer

Editor

Market Wealth Daily