The Federal Open Market Committee (FOMC) is preparing for the first interest rate cut since 2020 at its upcoming meeting on September 17-18.
Tesla (NASDAQ: TSLA)
During the October 2023 earnings call, Elon Musk emphasized that a high interest rate regime poses a threat to Tesla's profitability. Besides economic aspects, including expectations of rate cuts, Tesla could also benefit from a potential Trump administration that is likely to be hostile to Diversity, Equity, and Inclusion (DEI) programs. Tesla has already dropped DEI language from its reports in January 2024.
Charles Schwab (NASDAQ: SCHW)
As the economy shifts from a high to a low interest rate regime, stock market investing is likely to make a comeback. In August, Charles Schwab reported a 4% increase in new brokerage accounts compared to the previous year. Total client assets increased to $9.74 trillion, up 20% year-over-year. Despite a decline in stock in July 2024, the company has a record net core base to work with.
Textron Inc. (NASDAQ: TXT)
Lower interest rates spur favorable loans for aircraft purchases, benefiting Textron, particularly for civilian Beechcraft and Cessna aircraft. In March 2024, subsidiary Bell Textron secured a $455 million contract for 12 AH-1Z helicopters for Nigeria. Textron could also gain from the elimination of DEI programs under a Trump administration. In the last quarter, the company reported $3.5 billion in revenues with a net income of $247 million.
Falling interest rates could have a significant impact on various economic sectors. Stocks in Tesla, Charles Schwab, and Textron appear promising under the changing interest rate regime.
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