Stocks in This Sector Are Getting a Big Lift on Rising Hopes of a Fed Rate Cut Next Month

Core Insights - Homebuilder stocks experienced significant gains following comments from a Federal Reserve official suggesting a potential rate cut in December [2][8] - The likelihood of a rate cut has increased to approximately 70%, up from 39% the previous day, according to CME Group's FedWatch tool [3] - Major homebuilder stocks such as Builders FirstSource, D.R. Horton, and KB Home saw their shares rise by about 7% on Friday, with other related stocks also benefiting from the news [4][8] Impact on Homebuilders - A potential reduction in the Federal Reserve's benchmark interest rate could lead to lower mortgage rates, making homes more affordable and stimulating demand from homebuyers [5][7] - Despite the positive outlook, many homebuilder stocks remain in negative territory for 2025 due to a sluggish housing market and elevated mortgage rates [6] Market Reactions - The comments from Federal Reserve Bank of New York president John Williams have fueled optimism among traders, leading to a surge in homebuilder stock prices [2][4] - Stocks connected to real estate, including Zillow Group and Rocket Companies, also saw gains as a result of the increased expectations for a rate cut [4]