Schroders global publication states that, based on the expectation that the US economy will not fall into recession and the possibility of a rate cut by the Federal Reserve in September 2024, momentum stocks, growth stocks and high-quality stocks will outperform the market. Meanwhile, defensive sector stocks may also perform well in a rate-cut environment compared to cyclical sector stocks. Historically, after the first rate cut by the Federal Reserve, defensive sector stocks tend to outperform cyclical sector stocks. This is particularly evident during economic recessions, as investors seek to invest in sectors that are most likely to withstand weak economic growth and benefit from more aggressive rate-cutting policies. From a historical perspective, when the US inflation rate is close to the Fed's target of 2%, momentum investment strategies and technology stocks tend to perform well. On the other hand, most cyclical sector stocks typically perform poorly in the first three months after an initial rate cut, especially if the rate cut occurs during a US economic recession. However, one year after the start of a period of loose monetary policy, cyclical sector stocks usually provide strong returns. Initially, cyclical stocks may be sold off due to weak economic growth and easing inflationary pressures, but as their valuations become more attractive and investors expect rate cuts to boost economic activity and corporate profits, these sectors become more appealing. However, the finance and non-essential consumer goods sectors are exceptions, as they generally perform well in the first few months after the initial rate cut. It is worth noting that in the first few months after a rate cut, the technology sector tends to underperform the market. In a rate-cutting cycle, high-quality and growth stocks typically see gains, although slightly lower than cyclical stocks. Cyclical sector stocks, such as technology, tend to perform well in rising financial markets, but experience greater declines when the market falls. During a period of loose monetary policy initiated by the Federal Reserve during an economic recession, the performance of growth stocks, high-quality stocks and momentum stocks may be weaker. This may be because investors tend to invest in defensive sector stocks in the financial market, such as low-volatility stocks.