Interest rates are unexpectedly retreating, spurring investors to rethink which stocks to bet on as 2021 continues. Certain stocks that have performed well when rates fell in the past might just be big winners again.
Investors anticipated higher interest rates this year as the economy reopens, triggering big growth and inflation. Yet despite some high inflation readings, rates have started reversing lower.
The May consumer price index came in hotter-than-expected on Thursday, jumping 5% from a year earlier — the fastest pace since 2008. Even so, the 10-year Treasury yield fell as low as 1.43% this week, down from its high for the year of 1.77% and the lowest level in three months.
CNBC PRO identified eight periods of significant drops in the 10-year Treasury yield over the past decade. We then calculated the median return for S&P 500 stocks during those periods. The stocks below had the best returns during periods when the 10-year yield was falling.
What's more, we filtered out stocks that are currently not loved by analysts. These stocks have a buy rating from at least 70% of analysts.