These 2 ETFs Could Outperform as Jerome Powell Lowers Rates

Group 1 - The Federal Reserve has lowered the benchmark federal funds rate by a quarter of a point to a range of 4% to 4.25%, marking the first cut since December 2024, as a "risk management cut" to prepare for potential economic downturns [1] - The FOMC dot plot indicates that the majority of members expect two more rate cuts in 2025 and one in 2026, with the federal funds rate projected to end 2026 around 3.4% [2] - Lower interest rates are expected to lead to lower mortgage rates, stimulating investment in real estate as borrowing becomes cheaper, and also lowering cap rates, which are crucial for evaluating real estate investment risks [5] Group 2 - The Real Estate Select Sector SPDR Fund (XLRE) includes stocks from the real estate management, development, and REIT sectors, allowing investors to gain exposure to real estate without owning physical assets [4] - XLRE's top holdings include Prologis, Welltower, Equinix, and Simon Property Group, with a yield of 3.28% due to the strong dividends paid by the REITs it holds [6] - Despite potential challenges in the real estate sector, having exposure to real estate with strong passive income is generally favorable in a falling-rate environment [7]