💰 Value's winning streak

How to Position Your Portfolio for Imminent Fed Hikes

The Fed is limbering up its hiking boots, and not every sector is ready for the climb. Futures markets are pricing in ~75% (opens in a new tab) odds of a rate increase by December. New Fed Chair Kevin Warsh's Jackson Hole speech could sharpen that timeline fast.

Sector winners: Barclays data show energy, materials, and technology have historically outperformed during rate-hiking cycles since the mid-1990s, putting them among the strongest sectors to watch today. Energy is already leading the pack, with the Energy Select Sector SPDR ETF up more than 40% this year, driven by ExxonMobilXOM, ChevronCVX, and ConocoPhillipsCOP. Barclays strategists call energy “the most resilient beneficiary of the late-cycle backdrop.”

• Freeport-McMoRanFCX, a 2026 Barron's stock pick, is up more than 50% this year and trading at a record high.
• The broader tech sector trades at just 21x earnings estimates despite an estimated earnings growth rate of 42%, per Yardeni Research.

Markets Build a Cushion

How markets respond will largely come down to how far the Fed goes. JPMorgan Private Bank expects risk assets to hold up if the central bank delivers no more than two hikes. The S&P 500 has already fallen about 4% since rate-hike expectations started building in mid-June, suggesting markets have already absorbed a good part of the impact.

• Fed minutes show more officials favored (opens in a new tab) a July hike than the three who formally dissented, with many signaling support if inflation stays elevated.
• JP Morgan data show the S&P 500 averaged (opens in a new tab) a ~3.3% decline per 25-basis-point hike across the 2018 and 2022 cycles.

Where rates bite: Banks, consumer discretionary, utilities, staples, and real estate tend to struggle as higher rates weigh on valuations and dividend appeal. Barclays warns that financials and traditional defensives “have faced the greatest pressure as tighter financial conditions and rising discount rates weigh on earnings expectations and valuations.” Healthcare is the exception, with Yardeni Research overweight on attractive valuations and improving drug pipelines despite Barclays flagging pullback risk. In a hiking cycle, growth beats yield.

Meta's net income has climbed sharply since 2022, closing 2024 at $62.4B before easing slightly to $60.5B in 2025.

Canada Turns to 50% Tariffs After Trade Negotiations Break Down

Canada's trade patience has officially run out. After trade talks collapsed (opens in a new tab), Ottawa announced retaliatory tariffs of up to 50% on US products totaling ~$20B in imports, effective Sept. 8. Prime Minister Mark Carney pledged to match Washington "dollar for dollar," though he acknowledged the move "will raise costs and reduce choice for Canadians."

• Steel and aluminum tariffs double to 50% (opens in a new tab), while cheese, dishwashers, and seafood face 25% duties, and electronics and tools get hit with 15%.
• Canada paired the tariffs with a C$7.5B (~$5.4B) support package (opens in a new tab) covering loans and income supplements for affected firms and workers.

Retaliation's cost: Ottawa’s measures target just 7% of annual US imports, but the economic fallout could extend much further. Strategist Karl Schamotta calls countertariffs “effectively taxes on domestic consumption,” while Trump’s threat to double auto tariffs could put Canadian plants that send more than 90% of their output abroad under pressure. For Ottawa, hitting back without inflicting more pain at home is becoming a harder balance to strike.