Which sectors are negatively affected by the Fed's rate cut?

The Fed's rate cut can have negative impacts on certain sectors, particularly those that are sensitive to changes in interest rates. Here are some sectors that may be negatively affected:

1. **Utilities and Real Estate**: These sectors often perform poorly when long-term bond yields increase, as they do when the Fed cuts rates. Higher bond yields make the income from utility and real estate stocks less attractive compared to bonds, leading to a decrease in these sectors' stock prices.
2. **Financials**: Banks and other financial institutions can be negatively impacted by the Fed's rate cuts. When the Fed reduces rates, it compresses net interest margins for banks, which can lead to reduced profitability. Additionally, lower rates can lead to reduced loan demand and increased loan defaults.
3. **Consumer Discretionary**: Higher interest rates can reduce consumer spending, which can negatively impact sectors that are sensitive to consumer spending, such as consumer discretionary stocks. While lower rates can stimulate spending in the short term, if inflation expectations remain high, consumers may not increase spending, and the sector may not benefit from the rate cuts.
4. **Technology**: Historically, the technology sector has underperformed the S&P 500 in the six months following the first Fed rate cut. This may be due to higher borrowing costs for tech companies, which can reduce their profitability, or because investors shift their focus to more defensive sectors in a low-interest-rate environment.

In summary, while the Fed's rate cuts can stimulate the economy and benefit certain sectors, such as those that rely on borrowing for expansion, other sectors may be negatively impacted due to changes in borrowing costs, consumer spending, and investor sentiment.