US stocks have surged over the past two days following the Federal Reserve’s decision to lower its benchmark interest rate by 50 basis points.

This marks the Fed’s first rate cut in four years and signals a more accommodative monetary policy ahead, with an additional 50-basis point cut projected by year-end.

Lower interest rates generally boost the stock market, as they reduce borrowing costs for companies, encouraging investment, expansion, and potentially higher profits.

However, analysts at Jefferies have singled out three rate-sensitive stocks that stand to gain the most from this shift in monetary policy, particularly as rates continue to decline in the coming months.

Here’s a closer look at these stocks and why they could be smart investments for 2025.

JPMorgan Chase & Co (NYSE: JPM)

JPMorgan Chase is one of the top picks for Jefferies, as it’s poised to benefit from the Federal Reserve’s recent rate cuts.

Lower interest rates are expected to positively impact JPMorgan’s wealth management and investment banking divisions.

With the Fed’s jumbo rate cut raising hopes for a soft landing in the economy, JPMorgan could see significant upside potential.

Despite a strong performance year-to-date, Jefferies still sees value in JPMorgan, with the stock trading at a price-to-earnings ratio of under 12.

In addition, investors can enjoy a solid 2.19% dividend yield, making JPMorgan an attractive option for long-term growth.

Alphabet Inc (NASDAQ: GOOGL)

Alphabet, the parent company of Google, is another major beneficiary of lower interest rates, particularly among large-cap tech stocks.

Currently down about 15% from its July high, Alphabet presents a unique opportunity for investors to buy a high-quality tech stock at a discount, according to Jefferies.

Lower rates will provide Alphabet with greater financial flexibility to accelerate investments in artificial intelligence (AI), a sector Statista forecasts will become a $1 trillion market by 2030.

Alphabet’s recent introduction of its first-ever dividend and a $70 billion stock buyback program further enhanced its long-term appeal for investors.

Owens Corning (NYSE: OC)

Owens Corning, the Ohio-based manufacturer of fiberglass composites, is expected to thrive in a low-interest-rate environment.

Jefferies predicts that falling rates will boost demand for insulation, roofing, and fiberglass composites as the housing market sees renewed activity from lower mortgage rates.

In August, Owens Corning exceeded expectations for its quarterly earnings and projected over 20% year-over-year growth in net sales for the third quarter.

This outlook signals strong confidence in the company’s future.

Investors can also benefit from Owens Corning’s dividend yield of 1.35%, making it another solid choice for rate-sensitive stocks.

As the Federal Reserve moves toward a more accommodative stance, these three stocks—JPMorgan Chase, Alphabet, and Owens Corning—are well-positioned to capitalize on the benefits of lower interest rates.

With strong fundamentals, attractive valuations, and promising growth prospects, these companies could be valuable additions to any investor’s portfolio for 2025.

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Applied Materials (AMAT) stock price has done well this year, helped by the ongoing investments in artificial intelligence. It has risen by about 18.57%, beating some of the top semiconductor companies like Intel, AMD, and Texas Instrument.

Applied Materials is a top chip company

Applied Materials is a leading semiconductor company that is not as well known as popular brand names like Intel, Nvidia, and AMD.

Yet its technology plays an important role in all forms of technology today. It is a leading player in areas like atomic layer deposition, chemical mechanical planarization, rapid thermal processing, and epitaxy. 

These technologies are used by almost all companies in the semiconductor industry, including Intel, Samsung, Micron, and SK Hynix. 

It is also involved in other areas like fab consulting, automation software, technology-enabled services, and supply chain assurance programs through its applied global services.

Additionally, Applied Materials is in the display industry, where it makes products that are used to manufacture LCD, OLED, and other display technologies for TVs, phones, and PCs.

As a result, the breadth of its services has helped to push its revenues up significantly in the past few years. Total revenue rose from over $14.6 billion in 2019 to over $26 billion in the last financial year.

Most of this growth has happened organically as the company has avoided making big acquisitions in the past. Its most recent buyout happened in 2020 when it spent $3.5 billion to buy Kokusai Electric. 

The growth happened as demand for key technologies jumped. The most recent technology is artificial intelligence, which has led to a strong demand for AMAT’s products. 

AMAT is growing steadily

The most recent financial results showed that Applied Materials’ business was still growing. Revenues rose by 5% to $6.78 billion.

Most of this growth – $4.9 billion – came from its semiconductor systems, including its foundry and logic solutions. However, this division’s operating margin dropped slightly to 34.8% during the quarter.

It was followed by its global services business whose revenue and operating margin rose to $1.58 billion and 29.6%, respectively. 

Additionally, its display business generated $251 million in revenues and an operating margin of 6.4%.

The company also boosted its forward guidance for the current quarter and this year. Analysts expect its quarterly revenue to come in at $6.95 billion, a 3.4% increase from the same quarter last year. For the year, revenues are expected to be $27.05 billion. Historically, Applied Materials has often done better than what analysts expect. 

Potential risks ahead

Applied Materials faces some risks ahead. First, there are signs that AI investments will start to slow down in the coming months. A key issue is that companies have boosted their AI spending at a time when demand and use case is not growing as fast, as Goldman Sachs noted.

We saw this situation happen during the Covid-19 pandemic. As semiconductor shortage escalated, companies like Texas Instrument and Analog Devices responded by boosting production only for them to suffer from substantial inventories. 

This view was confirmed by analysts from Mizuho and Citi who warned that the industry may struggle as demand wanes. Atif Malik, a Citi analyst, who downgraded the AMAT stock target by 10% to $217 said:

“We now see modest 2025 wafer fab equipment growth of 5% led by a 10% increase in leading edge logic, memory with domestic China DRAM down and NAND recovery pushed out to second half of 2025.” 

On the positive side, Applied Materials is not as expensive as other chip companies. It has a trailing P/E ratio of 22.7 and a forward figure of 22.54, which are lower than the industry median of 23.6 and 24.18.

Applied Materials stock analysis

AMAT chart by TradingView

On the daily chart, we see that the AMAT share price peaked at $255 in July and then pulled back below $200. It has formed a double-bottom pattern at $172 and is hovering at the 200-day moving average. However, it has dropped below the 50-day moving average and is between the 38.2% and 23.6% Fibonacci Retracement point.

Therefore, at this stage, the stock’s outlook is neutral, with the key points to watch being at $212 and $172. A drop below $172 will invalidate the double-bottom pattern and point to more downside. A move above $212 will point to more gains since it will confirm the double-bottom thesis.

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The Australian dollar (AUD) and the ASX 200 index will be in the spotlight this week as investors focus on the country’s central bank decision. The AUD/USD exchange rate has jumped to a high of 0.6838, its highest point since December 28 and 7.28% above its lowest point this year. 

Similarly, the blue-chip ASX 200 index surged to a record high of A$8,253, bringing the year-to-date gains to over 7%. 

RBA interest rate decision

The biggest macro news from Australia this week will be the monetary policy decision by the RBA. 

Most economists believe that the bank will have a significantly different tone from the Federal Reserve.

Instead of cutting rates, the RBA will leave interest rates unchanged and hint at delivering a hike later this year or early in 2025 if inflation remains high.

Economic data released last week showed that the country’s labor market is doing well as the unemployment rate remained unchanged at 4.2%. The economy created over 47.5k jobs in August, higher than the expected 26.4k while the participation rate remained at 67.1%.

Australia’s biggest issue is not the labor market but inflation, which has remained stubbornly higher this year. The most recent quarterly inflation data showed that the headline CPI retreated to 3.5%, much higher than the RBA’s target of 2.0%.

Still, most analysts believe that the RBA is bluffing when it threatens to hike interest rates. In fact, the bond market believes that the bank will start cutting rates later this year.

The 10-year yield was trading at 3.95%, down from the year-to-date high of over 4.5%. Similarly, the five-year yield fell to 3.85% from over 5% a few months ago. 

Additionally, Australia’s top banks like Westpac, ANZ, and CBA have already started to cut their lending rates in expectation of cuts. 

The RBA will not want to be the only central bank that is hiking as others cut. Last week, the Federal Reserve decided to cut rates by 0.50% as it decided to engineer a soft landing. Other central banks like the Bank of England (BoE), Swiss National Bank (SNB), and the European Central Bank (ECB) have all slashed rates this year.

The RBA’s other concern is that a rate hike would hit an economy that is showing signs of slowing down. A key issue is that China, which buys most of Australia’s commodities has stagnated.

Additionally, the prices of most commodities that Australia sells like coal and iron ore has dropped sharply this year. 

ASX banks in focus

Several companies in the ASX 200 index will be in focus this week. The most important will be banks like ANZ, CBA, and Westpac, which have surged hard this year. In most periods, banks tend to be the most affected by interest rates because of the net interest margin.

In theory, banks make more money when rates are rising because the margin often increases. Recently, however, there are signs that higher rates have let to capital flight as more Australians switch to the high-yielding money market funds. 

The other top ASX company to watch this week will be Rupert Murdoch’s REA Group, which has been working to acquire Rightmove, a UK property listing firm. According to media reports, Rightmove has rejected the offer. 

ASX 200 index forecast

Turning to the daily chart, we see that the S&P/ASX 200 index jumped to a record high of A$8,253. This rally happened as other global indices like the S&P 500 and the Nasdaq 100 indices surged to an all-time high. 

The ASX 200 index has pulled back and retreated below the key support level at A$8,166, its highest point on August 1. It has remained above all moving averages.

However, there are signs that it has formed a bearish engulfing pattern, pointing to more downside this week. If this happens, it will retest the support at $8,000. In the long term, however, the index will likely rebound and retest the all-time high.

AUD/USD technical analysis

The AUD/USD pair has been in a strong bull run after bottoming at 0.6351 in August. It has jumped by over 7% and is hovering at an important resistance point at about 0.6800. 

The pair has risen above the 50-day moving average and is nearing the crucial resistance point at 0.6870, its highest point in December last year. Also, the Stochastic Oscillator has moved to the overbought level.

Therefore, the pair’s outlook is bullish as long as bulls move above the key resistance point at 0.6837, its highest point last week. Such a move will push it to the next point at 0.6870.

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The Hang Seng index has rebounded in the past few days, joining other global indices that are doing well. It has risen in the past eight consecutive days and is hovering at its highest point since June. Also, it has jumped by over 23% from its lowest point this year.

HKMA interest rate cut

The Hang Seng index rose after the Hong Kong Monetary Authority (HKMA) decided to slash interest rates by 0.50% last week.

Historically, the HKMA does whatever the Federal Reserve does because of the peg that has existed for over three decades. 

This peg ensures that the USD/HKD exchange rate remains within the support and resistance levels at 7.75 and 7.85. Hong Kong companies often do well when the HKMA reduces its interest rates. 

The Hang Seng index’s rebound coincided with that of other global central banks, which soared after the Federal Reserve slashed interest rates by 0.50%. In the US, the S&P 500 and Nasdaq 100 indices jumped to a record high last week.

Hang Seng faces risks ahead

While the Hang Seng index has bounced back, it remains significantly lower than its pandemic high. It has dropped by over 20% from its highest point in 2023 and over 41% from its highest level in 2021.

The index faces several important risks ahead. First, banks in the index are highly exposed to the real estate sector, which is still slowing down. For example, according to the FT, HSBC is highly exposed to defaulted commercial property loans in Hong Kong. 

It has about $3.2 billion exposure to these loans, up from $576 million six months ago. This has happened as vacancy rates have jumped, with many luxurious malls seeing little traffic in the past few months.

This means that other Hang Seng index banks like Hang Seng Bank, China Construction Bank, ICBC, and Bank of China are highly exposed to the real estate industry. 

The other big risk is that the real estate industry is still under intense pressure this year even after Beijing announced new measures to save the sector. Indeed, most companies in the industry like Wharf Real Estate, China Resources Land, and Henderson Land have dropped this year.

The biggest risk facing these firms is that tensions between the US and China are set to increase in the coming months. D

There are still chances that Donald Trump will win the upcoming election. Donald Trump has pledged to impose substantial tariffs on Chinese goods, restarting the trade war that happened in his first term. Kamala Harris has also vowed to be tough on China.

Another trade war could see tit-for-tat measures by the US and Chinese governments, which will affect the amount of money that moves from western countries to China.

Meanwhile, there are signs that the Chinese economy is not doing well as the slowdown continues. It expanded by just 4.7% in the second quarter, pushing more analysts to downgrade the country’s GDP estimate.

Leading indicators like iron ore, copper, and coal are also pointing to a slowdown in the country. In most periods, the Hang Seng index thrives when the Chinese economy is doing well since most of its constituents have an exposure to the country.

Hang Seng index analysis

The weekly chart shows that the Hang Seng index formed a morning star chart pattern, a popular bullish sign. This explains why it rose by over 1.3% last week. It has moved to the 50-week and 25-week moving averages.

The index has also formed a symmetrical triangle chart pattern, which is nearing its confluence level. 

Therefore, the Hang Seng index will likely remain in this range in the near term. If this happens, it will likely remain inside the range of $17,000 and $18,000. 

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The Swiss Market Index (SMI) and the Swiss franc (CHF) will be in the spotlight this week as the Swiss National Bank (SNB) delivers its interest rate decision. The USD/CHF exchange rate has retreated by almost 8% from its highest point this year while the SMI has retreated by over 4.4% from its highest level this week.

SNB interest rate decision

Central banks have been in focus in the last few days as most of them delivered their rate decisions. 

Last week, the Federal Reserve delivered a jumbo rate cut while the Bank of England (BoE) delivered a hawkish pause. Analysts expect these banks to continue cutting interest rates now that inflation is easing and the economy is slowing.

The SNB is expected to deliver another interest rate cut when it meets on Thursday. If it does that, it will slash them by 0.25% to 1.0%. It will be the third interest rate cut this year.

The bank is contending with a complicated issue. Swiss inflation has remained stubbornly high – in Swiss standards – while economic growth is slowing.

Additionally, some key strategic sectors are also not doing well this year. For example, the luxury watchmaking industry is going through a rough patch as international demand, especially in China is slowing.

The situation has worsened such that the government has intervened to ease the burden of some companies in the sector. 

One of the top reasons why the Swiss economy is slowing is that the Swiss franc has been significantly stronger against the US dollar and the euro.

Switzerland is mostly an export-oriented country and has a trade surplus of over $56 billion. As such, a stronger franc makes its products more expensive abroad, especially in Europe, its biggest trade partner. 

Swiss Market Index analysis

The SMI index has struggled in the past few weeks. While it has jumped by over 16% from its lowest point this year, it has slipped by over 4% from the year-to-date high.

This performance happened because of the strong Swiss franc, which has affected most of the top exporters. 

A good example of this is Nestle, the biggest food company in the world whose stock has slumped by over 15% this year. Kuehne & Nagel, a top company in the logistics industry, has droppped 12% this year. 

Richemont, a leading player in the luxury goods industry, has dropped by over 15% in the last 30 days. 

On the other hand, some Swiss companies like ABB, Holcim, Swiss Re, Givaudan, and Alcon have done well, rising by over 20% this year. 

The daily chart shows that the Swiss Market Index formed a double-top chart pattern at CHF 12,435 earlier this year. In most periods, this is one of the most popular bearish signs in the market, which explains why it has pulled back.

The SMI index has moved below the 100-day and 50-day Exponential Moving Averages (EMA) and is hovering at the 23.6% Fibonacci Retracement point. 

It has also formed a bearish flag chart pattern, a popular negative sign. Therefore, the index will likely have a bearish breakout as sellers target the 38.2% Fibonacci Retracement point at CHF 11,600, which is about 2.7% below the current level.

USD/CHF technical analysis

The USD to CHF exchange rate peaked at 0.9222 earlier this year and has now plunged by over 7% to 0.8500. It bottomed at 0.8375 and has bounced back to the psychological point at 0.8500. 

The pair formed a death cross pattern in August as the 200-day and 50-day Exponential Moving Averages crossed each other. 

It has also formed a bearish pennant chart pattern. Therefore, the pair will likely have a bearish breakout, with the next point to watch being at 0.8376, its lowest point this year. A break below that level will point to more downside, with the next point to watch being at 0.8300.

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