Some stocks stand to see outsized gains if, as expected, the Federal Reserve cuts interest rates Wednesday. The market is unanimous that the cost of short-term borrowing is set to decline. Interest rate futures traded on the CME Group are pricing in 100% odds that fed funds will decline by at least a quarter percentage point from their current 4.25% to 4.50%, according to its FedWatch tool. Given that, CNBC Pro used AI investing platform Reflexivity to screen for stocks that have historically rallied on the back of rate decreases by the central bank. CNBC Pro then sorted inside that group, looking for performance three months out from the rate reduction. Here are 20 of the stocks that made the screen: Stocks including Tesla and Netflix that are popular among individual investors made the list. The cyclical companies win two ways from cuts, benefiting on the one hand from improved market sentiment as financial conditions loosen, and on the other from brighter prospects for consumer spending. Further gains in Tesla would build on an already impressive turnaround. Shares have soared roughly 85% from their April lows and recently turned positive on the year. TSLA YTD mountain Tesla, year to date Three months out from a rate cut, Tesla shares have rallied a median 43%, according to Reflexivity. At a year, the stock just about doubled. Other stocks that turned up on the screen stand to benefit from consumers seeing stronger household balance sheets and more robust finances as rates come down. Best Buy , for example, has hit a rough patch with shares dropping more than 14% this year. But Reflexivity found the electronics retailer has climbed a median 19% three months after a rate cut and about 38% looking a year out.
