Thanks for the reply, Julius. Took a while to find the article you referenced, but for anyone who may be interested, this is a link to it:
personalwealth.com
As I suspected, the best performing sectors after a rate hike don't do better because of the rate hike, they do better because they are less affected by the rate hike than other sectors. To wit:
It also came as no surprise that the major drug manufacturers was the best performing industry. Obviously it's because of the defensive nature of the industry: people get sick whether rates go up or down. Therefore, the demand for these products is not interest-rate sensitive. Computer hardware companies (the only technology industry with a long enough history to be included in the results) were a bit more of a surprise, especially since most Wall Street prognosticators claim that the reason tech stocks have been performing so poorly in the past few weeks is because of higher rates. Five of the remaining industries are from the consumer staples sector. Like the pharmaceutical companies, these entities produce goods that have a fairly static level of demand.
The worst performers came from four sectors: Capital Goods, Consumer Cyclicals, Financials and Transportation. Their underperformance was to be expected, since they benefit from an expanding economy. And since the purpose of higher interest rates is to slow the growth in the economy, and keep inflation at bay, this works against these economically sensitive sectors.
The best/worst performer list wouldn't copy; it is an interesting chart to look at though, for any who may be interested.
jim |
