Powell put drives up interest rate-sensitive stocks

Fed Chairman Jerome Powell’s speech in Jackson Hole, Wyoming Friday significantly raised the odds for a rate cut in September and lifted the fortunes of interest-rate sensitive stocks across Wall Street.

At an economic symposium, Powell confirmed what other Fed members have intimated for the past several weeks. With inflation drifting closer to the Fed’s 2% target and softness in the housing and jobs market, “the time has come” for monetary accommodation, Powell said, adding that the Fed “does not seek or welcome further cooling in labor market conditions.”

His remarks drove Treasury yields lower and stocks higher, with gains led by rate-sensitive stocks like recreational vehicles, motorcycles, and boats, demand for which is heavily reliant on interest rates. Since the majority are financed, the decision whether to purchase an RV, boat, or motorcycle relies more on the monthly payment than the sticker price. As a result, shares of Winnebago (NYSE:WGO), Thor Industries (NYSE:THO), LCI Industries (NYSE:LCII), Polaris (NYSE:PII), MarineMax (NYSE:HZO), OneWater Marine (NASDAQ:ONEW), Harley-Davidson (NYSE:HOG), Malibu Boats (NASDAQ:MBUU), Brunswick Corp (NYSE:BC) and Mastercraft Boat Holdings (NASDAQ:MCFT) are among the top-performing names in the recreational vehicle segment.

Lindblad Expeditions (NASDAQ:LIND) and other high-end travel names are also getting the “Powell put” with outsize gains for Viking Holdings (NYSE:VIK) as well as cruise operators Norwegian Cruise Line Holdings (NYSE:NCLH), Royal Caribbean (NYSE:RCL), and Carnival Corp (NYSE:CCL).

While the gains are not as impressive, the upbeat outlook on U.S. interest rates and the positive impact on borrowing and spending is giving a shot in the arm to home furnishing stocks like RH (NYSE:RH), Wayfair (NYSE:W), Williams-Sonoma (NYSE:WMS), and Beyond (NYSE:BYON), and specialty retailers including Stitch Fix (NASDAQ:SFIX) and ThredUp (NASDAQ:TDUP).