The Dow Jones Industrial Average
However, the Dow got absolutely crushed by Bank of America
Having supernaturally low interest rates creates an environment for previously battered banks to shore up their balance sheets and build a better foundation for long-term profitability. With the U.S. adding only 96,000 jobs in August and the unemployment rate still stubbornly stuck above 8%, it's unlikely the Fed will do anything that could extinguish the recent flicker of growth from our economy, and will probably try to stoke the coals with a little extra QE fuel.
How to play it
A massive flooding of money into the economy paves the way for inflation, though, and can quickly reduce the viability of certain investments. One way to combat that risk is with exposure to the energy sector, which has historically protected against inflation. I remain very bullish on the energy sector, and I see a long runway of profits for the patient investor.
According to Factset, the energy sector has a 66% buy rating by analyst now, the highest of any sector on the S&P 500
As rapidly growing economies like China and India see a spike in energy demand, they are increasingly awarding these companies key services contracts and using their expertise in the space. Of the two, Schlumberger appears better positioned for growth abroad. The company continues to win key contracts, and even manages whole oil fields in essential energy markets like Russia. This comes at a premium, though, as the company trades for more pricey multiples than peer Halliburton.
Don't stop now
Both the finance and energy spaces appear poised to pop contingent on the Fed's decision, and I think investors should have exposure to the best plays in each space.
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