In The Wake Of Fed Rate Hikes, Here Are The Dow's Biggest Winners And Losers - And Where They're Headed

A year has passed since the Federal Reserve started hiking interest rates, and the stock market has seen both winners and losers as a result of tighter financial conditions as a result.

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Since rate hikes began, the Dow Jones Industrial Average, which consists of 30 blue-chip American companies, has been perfectly divided in half. The shares of 15 of the names saw a rise during the period, while the shares of 15 of the names lost value through Monday's close.

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There has been an average error of 5% in the blue-chip gauge itself since March 15, 2022 - the day before the hike cycle began.

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The federal funds rate has been raised eight times since October 2007 and now stands at 4.5%-4.75%, which is the highest level since October 2007. Despite recent signs of slowing down, the central bank is counting on the hikes to bring down inflation, which is still close to its peak level since the early 1980s, despite recent signs of a slowdown.

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Merck turned into the biggest gainer among the winners, with a rally north of 40% since last March, putting it in the top tier of gainers. Based on Wall Street's average price target, it is estimated that in the next 12 months, the shares of the company developing the Keytruda cancer treatment could rise by another 8%. There is still more room for growth for Merck, according to Jefferies, which initiated coverage of the company and gave it a buy rating.

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Banks on the other hand have done well, as their lending margins have improved with the increase in interest rates. A number of financial institutions, such as Goldman Sachs, JPMorgan, Visa, and American Express, have reported gains since the Fed began to hike interest rates. It is believed by analysts that Goldman, JPMorgan, and Visa will all have double-digit gains in the coming months.

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In the tightening period, some of the biggest winners were companies such as Boeing, Caterpillar, and Honeywell, which gained a lot of market share. Boeing and Caterpillar's shares have both gained 17% since last March, while Honeywell's shares have gained about 5% over the same period. Due to the global economy's continued stability, these industrial companies with strong pricing power have been able to hold up well during this time.

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There was a significant decline in valuations for technology stocks due to higher interest rates, which hurt the sector's valuations. The biggest loser during the tightening period has been Intel, which has suffered a loss of 42% during this period. There was also a decline in revenue for Microsoft, Salesforce, and Cisco.

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The Wall Street analysts expect, however, that the tech sector will lead the market comeback as the Federal Reserve slows down its pace of raising interest rates. On average, analysts expect Microsoft's shares to rise more than 10% in the next 12 months, while Salesforce's shares are expected to rise 18% in the following year.

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The consumer stocks of Disney and Home Depot also suffered as inflation ate away at consumers' spending power and weakened the housing market as a result of low inflation. Despite the fact that Disney's stock has fallen 25% since the Fed began tightening monetary policy one year ago, Wall Street analysts believe it could rebound by another 25% within the next year.