The Federal Reserve left its benchmark policy rate unchanged in the range of the current 5.25-5.5% on Dec 13 in its final FOMC meeting of the year. Wall Street rallied following the announcement, with all three major indexes — the Dow, the S&P 500 and the Nasdaq — recording a jump of 1.4% each.

The Dow ended at 37,090.24 points, its first record close since January 2022. Understandably, investors’ sentiment is high as they believe that the Fed may end its monetary tightening campaign anytime now as inflation continues to cool.

The Fed’s decision was highly anticipated as inflation cooled further in November. The consumer price index (CPI) increased 3.1% last month on a year-over-year basis, the Labor Department said on Dec 12. Month over month CPI increased just 0.1%.

Following the decision to keep interest rates unchanged for the third straight time this year, Fed officials maintained a dovish stance. Federal Reserve Chairman Jerome Powell said that he believes that the current policy rate is near or at its peak, and the central bank will closely monitor inflation data and try not to keep interest rates high for a longer period.

Also, the Fed projected three interest rate cuts of 25 basis points each next year, which is expected to take the policy rate to 4.6% by the end of 2024, lower than the earlier forecast of 5.1%.

Lower interest rates are certainly going to make borrowing costs cheaper. This has raised investors’ confidence as they now expect a softer landing for the economy.

Given this situation investing in consumer discretionary stocks like Accel Entertainment, Inc. (ACEL Quick QuoteACEL - Free Report) , DoubleDown Interactive Co., Ltd. (DDI Quick QuoteDDI - Free Report) , Hooker Furnishings Corporation (HOFT Quick QuoteHOFT - Free Report) ,Lululemon Athletica Inc. (LULU Quick QuoteLULU - Free Report) and Warner Music Group Corp. (WMG Quick QuoteWMG - Free Report) would be a prudent choice.

Our Choices

We have identified five stocks from the consumer discretionary sector that are likely to benefit from the Fed’s decision to keep interest rates unchanged. Each of these stocks carries a Zacks Rank #1 (Strong Buy) or 2 (Buy).  You can see the complete list of today’s Zacks #1 Rank stocks here.   

Accel Entertainment, Inc. is a distributed gaming operator primarily in the United States. ACEL’s business consists of the installation, maintenance and operation of VGTs, redemption devices, which disburse winnings and contain ATM functionality, and other amusement devices in authorized non-casino locations such as restaurants, bars, taverns, convenience stores, liquor stores, truck stops and grocery stores.

Accel Entertainment’sexpected earnings growth rate for the current year is 3.5%. The Zacks Consensus Estimate for current-year earnings has improved 11.1% over the past 60 days. ACEL presently has a Zacks Rank #2.

DoubleDown Interactive Co., Ltd. is a developer and publisher of digital social casino games based in Seattle.

DoubleDown Interactive’s expected earnings growth rate for the current year is 334.8%. The Zacks Consensus Estimate for current-year earnings has improved 9.3% over the past 60 days. DDI currently sports a Zacks Rank #1.

Hooker Furnishings Corporation is a leading manufacturer and importer of residential furniture, primarily targeted at the upper-medium price range. HOFT offers diversified products, consisting primarily of home office, entertainment centers, imported occasional, bedroom, and wall systems, across many style categories within this price range.

Hooker Furnishings’ expected earnings growth rate for the current year is 12.4%. The Zacks Consensus Estimate for current-year earnings has improved 70.6% over the past 60 days. HOFT presently sports a Zacks Rank #1.

Lululemon Athletica Inc. designs, manufactures and distributes athletic apparel and accessories for women, men and female youth. LULU offers a line of apparel assortment, including fitness pants, shorts, tops and jackets designed for healthy lifestyle and athletic pursuits, such as yoga, training, and running as well as other sweaty and general fitness under the lululemon athletica brand name.

Lululemon Athletica’s expected earnings growth rate for the current year is 22.9%. The Zacks Consensus Estimate for the current-year earnings has improved 2.1% over the past 60 days. LULU presently carries a Zacks Rank #2.

Warner Music Group Corp. is a music-based content company. WMG’s operating segment consists of Recorded Music and Music Publishing. The Recorded Music segment is involved in the discovery and development of recording artists. Music Publishing owns and acquires rights. Warner Music Groupoperates principally in the United States, the United Kingdom and internationally.

Warner Music Group’s expected earnings growth rate for the current year is 23.8%. The Zacks Consensus Estimate for current-year earnings has improved 5.7% over the past 60 days. WMG presently has a Zacks Rank #2.