Federal Reserve Chairman Jerome Powell’s speech in Jackson Hole, Wyoming on Friday significantly increased the likelihood of a September interest rate cut, sending shares of interest-sensitive stocks across Wall Street higher.
At the economic symposium, Chairman Powell confirmed what other Fed members had said. As he has suggested over the past few weeks, Powell said that with inflation approaching the Fed’s 2% target and the housing and job markets weak, “the time has come for monetary easing,” adding that the Fed “does not seek or welcome a further cooling in labor market conditions.”
His comments sent Treasury yields lower and stock prices higher. The rise was driven by interest-rate sensitive stocks such as RVs, motorcycles and boats, which are highly dependent on interest rates. Most are on loans, so the decision to buy an RV, boat or motorcycle depends more on the monthly payment than the list price. As a result, Winnebago (NYSE:WGO), Thor Industries (NYSE:TH), LCI Industries (NYSE:LCII),Polaris(NYSE:PII), Marine Max (NYSE:HZO), One Water Marine (Nasdaq:ONEW), Harley Davidson (NYSE:HOG), Malibu Boat (Nasdaq:MBUU), Brunswick Corporation (NYSE:BC) and Mastercraft Boat Holdings (Nasdaq:MCFT) is one of the top performing brands in the recreational vehicle sector.
Lindblad Expedition (Nasdaq:LIND) and other luxury travel stocks are also on the receiving end of the “Powell Put,” with Viking Holdings (NYSE:VIK) and cruise operator Norwegian Cruise Line Holdings (NYSE:NCLH), Royal Caribbean (NYSE:RCL), Carnival Corporation (NYSE:CCL).
Although the increase is not large, the brightening outlook for U.S. interest rates is having a positive impact on borrowing and spending, which is why RH(NYSE:RH), Wayfair (NYSE:W), Williams-Sonoma (NYSE:WMS), and thereafter (NYSE:BYON), Stitch Fix (Nasdaq:SFIX) and ThredUp (Nasdaq:TDUP).
