The Federal Reserve’s decision to keep interest rates unchanged could determine how well the rest of the year goes for certain stocks especially vulnerable to the level of rates. Stocks ended April lower across the board, with all three major indexes posting losses for the month as rates perked back up and hit the market. The 10-year Treasury yield at one point in April neared 4.75% after starting the year below 4%. Before the Fed decision Wednesday afternoon, the yield was hovering around 4.65%. Federal Reserve officials worried investors in recent weeks , with Chair Jerome Powell asserting he has so far seen less progress than he would like on taming inflation in 2024. The anecdote, coupled with troubling inflation and economic growth data in April, helped push Treasury yields higher. But Treasury yields dropped after Powell’s commentary Wednesday where he said the Fed’s next move wasn’t likely to be an increase to benchmark interest rates. That sent the 10-year yield down as much as 9 basis points. He added that the central bank was comfortable keeping interest rates elevated “for as long as appropriate,” and that the Fed still hasn’t seen the kind of progress it had hoped for on inflation in 2024. Stocks to watch The decline in the 10-year Treasury yield could benefit some interest rate sensitive stocks. Goldman Sachs compiled a portfolio of the shares with the highest sensitivity to changes in the benchmark 10-year Treasury yield. The correlation simply implies that stocks on the list could rise the most if Treasury yields pull back, or fall the most if yields climb. With yields on the mover lower Wednesday, these stocks could benefit the most if the trend continues. One of the stocks on the list is electric vehicle maker Tesla . Shares have pulled back more than 27% in 2024. The EV maker has struggled as consumer adoption continues to slow and sales decline. Higher interest rates have already been a continuous headwind to Tesla’s plans to both increase sales and introduce a more affordable $25,000 sedan, and a move to higher rates could make an already challenging year for Tesla harder to navigate. TSLA YTD mountain Tesla stock. Carnival also made the cut. The cruise operator stock has pulled back nearly 23% in 2024. Higher interest rates could spell more pressure for Carnival stock as cruises are highly discretionary. Higher credit card rates could make consumers less likely to splurge on vacations. CCL YTD mountain Carnival stock. Super Micro Computer stock has the highest positive correlation to nominal moves in the 10-year Treasury. Shares of the server maker have climbed a staggering 148% in 2024. However, that climb could run out of steam if Federal Reserve comments on Wednesday force Treasury yields higher. Shares are more than 17% lower so far Wednesday after the company reported lower-than-expected third-quarter revenue. Higher interest rates constrain technology companies’ ability to post the type of strong growth the sector has become synonymous with in recent years. Technology firms are key players in the race to monetize artificial intelligence and, by association, a key portion of Super Micro’s customers.
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