The stock market is about to make a major shift, this time driven by the shift in monetary policy set on by the Federal Reserve (the Fed). After the most recent meeting to decide the new path of interest rates for the United States, Jerome Powell (the Fed chairman) cut interest rates by the most aggressive pace in 16 years.

That means a few things for the stock market, but investors must understand that not all industries will be affected equally. The ones that deserve a second – or deeper – look are those that depend on consumer and financial trends, sectors like consumer discretionary and real estate. There’s even a historical tendency for oil prices to do well on lower interest rates. Hence, the energy sector deserves a spot on this list as well.

Within these spaces, names like Nike Inc. (NYSE: NKE), Chesapeake Energy Co. (NASDAQ: CHK), and even SoFi Technologies Inc. (NASDAQ: SOFI) carry enough reasons to potentially become relative winners in the coming quarters, especially as money and investors begin to shift their preferences to match this new business cycle.

Consumer Stocks Like Nike Poised for a Comeback with Rate Cuts on the Horizon

Nike shares have been volatile recently, particularly after the company reported a less-than-spectacular quarter. Leaning on China slowdowns and weakening U.S. consumer sentiment, bears raided Nike stock after the results came out.

However, some on Wall Street saw far ahead enough to pick up this stock at its lows, such as billionaire hedge fund manager Bill Ackman. More than that, analysts at Sanford C. Bernstein see the stock as worth up to $109 a share, calling for up to 32.4% upside from where it trades today.

Reacting to the recent Wall Street bullishness and institutional buying, bears retreated from further selling this stock, as Nike stock’s short interest declined by 14.5% in the past month alone. The stock still trades at only 67% of its 52-week high, leaving enough room for investors to catch a further recovery rally.

Energy Stocks Are Strong, But Chesapeake Stock Stands Out as the Better Pick

Over the past month, shares of Chesapeake have gone on a bit of a tear, rallying by as much as 7.5% as front-run expectations for Fed interest rate cuts started to influence the energy sector positively. One big investor who saw this trend coming is Warren Buffett.

Based on this belief, Buffett bought up to 29% of Occidental Petroleum Co. (NYSE: OXY), but retail investors have an advantage over mega investors like Buffett. They can choose smaller companies, especially those placed higher in the industry’s value chain and paid first.

Chesapeake Energy stock is one example, and Wall Street knows this. Those at Stephens see a potential bull case in which this stock reaches a valuation of $118 a share, daring it to rally by as much as 53.6% from where it trades today. Considering Chesapeake is still only 83% of its 52-week high, investors have a new reason to call for new highs.

That reason is interest rate cuts, which typically help boost business activity and demand, which rely on oil for manufacturing and transport. As oil prices recover based on these trends, Chesapeake stock might be at the center of the bullish price action, given its place in the value chain for exploration and production.

Lower Mortgage Rates Could Propel SoFi Stock to New Heights

Many would-be home buyers are sitting on the sidelines, waiting for more affordable financing rates through more accessible mortgages. Investors should remember that when interest rates come down, so do mortgage rates, enabling new home buyers to enter the market.

This is where SoFi stock comes into play and why Wall Street holds it in such high regard. Now that the stock is down to 80% of its 52-week high, there are a few more tailwinds in place to let investors assume this name could make its way back and even make a new high.

Wall Street analysts forecast up to $0.07 in earnings per share (EPS) in SoFi stock for the next 12 months, up from today’s EPS of $0.01. This is a seven-fold jump in profits, meaning some of the current price targets and valuations might have to be adjusted upward in face of this potential spike.

Those at Dimensional Fund Advisors saw enough reason to boost their holdings in SoFi stock by up to 263.3% as of August 2024, bringing their net investment to $86.5 million today, or 1.2% ownership in the company.

Wall Street’s Latest Top Pick Comes from a Different Market

Stanley Druckenmiller (responsible for George Soros’ returns) decided to sell out of the U.S. technology sector and sought to relocate his winnings into the bond market. Remember how mortgage rates come down during Fed cuts? So do bond yields.

Just like any other fixed-income product, prices are inversely related to yield, so as bond yields come down, their prices will go up. Investors can copy Druckenmiller’s playbook and check out the iShares 20+ Year Bond ETF (NASDAQ: TLT) for potential exposure.

The ETF has recently declined by roughly 3% from its highs. However, momentum is still bullish enough to suggest further upside from this level, especially as the Fed might keep cutting rates for the next 12 months, bringing the price of bonds higher and higher.