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Future generations need to know: Where were you when the Federal Reserve cut rates for the first time since 2020?
Glued to your computer screen, refreshing every second for updates on the most seminal historical event of your life thus far? Cool, us too.
And while we might be exaggerating ever so slightly, there’s no denying the importance of the Fed’s decision. It’s been just two weeks since the Fed voted to lower interest rates by a half percentage point, but chatter over the implications of that decision is already popping in earnings calls.
That’s particularly true for industries sensitive to rate cuts, like construction and manufacturing. And while a lot of the chatter is about the uncertainty companies and their consumers felt before the Fed’s decision, it's also illuminating how they're feeling about the future.
Take construction company KB Home, which felt that uncertainty was deep enough to impact sales.
In an earnings call the week after the Fed’s decision, president and COO Robert McGibney noted that “although traffic increased 8% year over year, some buyers hesitated on their purchase decision due to concerns about transacting too early given the uncertainty around interest rates and news headlines fueling an expectation of interest rate cuts by the Federal Reserve.”
He continued: “Ultimately, lower mortgage rates do help to stimulate demand, and we saw evidence of this in August, with net orders increasing sequentially week by week, as the month progressed.”
Then there were companies like Worthington Steel, a steel processing company, which voiced hope following the cut.
“We’re cautiously optimistic about [the construction market] going into calendar ’25,” EVP and COO Jeffrey Klingler said on the company’s Sept. 26 earnings call. “We expect that cut in interest rates are likely to have a positive impact there.”
On the other end of the spectrum, you have FedEx, which reported weak earnings a day after after the Fed’s decision—and saw a link between the two events.
“The magnitude of the Fed rate cuts yesterday signals the weakness of the current environment,” CEO Raj Subramaniam said on the company’s earnings call. “Now we’re not assuming a significant comeback on the industrial environment in the rest of this calendar year. We’re cautiously optimistic that industrial production will moderately improve in the second half, but we are dialing in pretty low growth expectations at this point because of the environment we are seeing.”
We have a feeling these executives will remember where they were when the Fed made its big decision.