Top 3 rate-sensitive stocks to watch in 2025 amid Fed rate cuts

US stocks have surged over the past two days following the Federal Reserve’s decision to lower its benchmark interest rate by 50 basis points.

This marks the Fed’s first rate cut in four years and signals a more accommodative monetary policy ahead, with an additional 50-basis point cut projected by year-end.

Lower interest rates generally boost the stock market, as they reduce borrowing costs for companies, encouraging investment, expansion, and potentially higher profits.

However, analysts at Jefferies have singled out three rate-sensitive stocks that stand to gain the most from this shift in monetary policy, particularly as rates continue to decline in the coming months.

Here’s a closer look at these stocks and why they could be smart investments for 2025.

JPMorgan Chase & Co (NYSE: JPM)

JPMorgan Chase is one of the top picks for Jefferies, as it’s poised to benefit from the Federal Reserve’s recent rate cuts.

Lower interest rates are expected to positively impact JPMorgan’s wealth management and investment banking divisions.

With the Fed’s jumbo rate cut raising hopes for a soft landing in the economy, JPMorgan could see significant upside potential.

Despite a strong performance year-to-date, Jefferies still sees value in JPMorgan, with the stock trading at a price-to-earnings ratio of under 12.

In addition, investors can enjoy a solid 2.19% dividend yield, making JPMorgan an attractive option for long-term growth.

Alphabet Inc (NASDAQ: GOOGL)

Alphabet, the parent company of Google, is another major beneficiary of lower interest rates, particularly among large-cap tech stocks.

Currently down about 15% from its July high, Alphabet presents a unique opportunity for investors to buy a high-quality tech stock at a discount, according to Jefferies.

Lower rates will provide Alphabet with greater financial flexibility to accelerate investments in artificial intelligence (AI), a sector Statista forecasts will become a $1 trillion market by 2030.

Alphabet’s recent introduction of its first-ever dividend and a $70 billion stock buyback program further enhanced its long-term appeal for investors.

Owens Corning (NYSE: OC)

Owens Corning, the Ohio-based manufacturer of fiberglass composites, is expected to thrive in a low-interest-rate environment.

Jefferies predicts that falling rates will boost demand for insulation, roofing, and fiberglass composites as the housing market sees renewed activity from lower mortgage rates.

In August, Owens Corning exceeded expectations for its quarterly earnings and projected over 20% year-over-year growth in net sales for the third quarter.

This outlook signals strong confidence in the company’s future.

Investors can also benefit from Owens Corning’s dividend yield of 1.35%, making it another solid choice for rate-sensitive stocks.

As the Federal Reserve moves toward a more accommodative stance, these three stocks—JPMorgan Chase, Alphabet, and Owens Corning—are well-positioned to capitalize on the benefits of lower interest rates.

With strong fundamentals, attractive valuations, and promising growth prospects, these companies could be valuable additions to any investor’s portfolio for 2025.