In this photo illustration, an Amazon logo is displayed on a smartphone with stock market percentages in the background.
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Interest rates are dropping unexpectedly, causing investors to rethink which stocks to bet on later in 2021. Certain stocks that performed well when interest rates fell in the past could make big winners again.
Investors expected higher interest rates this year as the economy re-opens, which would lead to strong growth and inflation. However, despite some high inflation data, interest rates have started to turn lower.
The consumer price index for May rose hotter than expected on Thursday, rising 5% yoy – the fastest increase since 2008. Even so, 10-year government bond yields fell as much as 1.43% this week from their annual high of 1.77% and the lowest level in three months.
CNBC PRO identified eight periods of significant declines in 10-year government bond yields over the past decade. We then calculated the median return on S&P 500 stocks over these time periods. The stocks listed below produced the best returns during times when the 10-year return was falling.
Additionally, we’ve filtered out stocks that analysts don’t currently love. These stocks have a buy rating of at least 70% of the analysts.