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Investors are worried about higher interest rates.

US stock futures were sharply lower on Monday, indicating last week’s sell-off was set to continue. Stocks slumped Friday after the January jobs report showed average hourly earnings rose at the fastest pace since the recession. It was another sign that inflation may be accelerating.

Moreover, investors are worried about how the Federal Reserve would respond. Last Wednesday, the central bank held its benchmark rate unchanged, but took a more aggressive view on inflation, saying it expected the rate of price changes “to move up this year” and stabilize around its 2% objective “over the medium term.”

Bank of America Merrill Lynch has identified stocks on the S&P 500 that could be hardest hit by a higher 10-year yield based on how the stocks have historically responded to changes in rates.

The equity strategists led by Savita Subramanian explained in a January 30 note: “Screens are based on a regression of stocks’ monthly excess returns vs. monthly changes in the nominal and real 10yr yields, including only those stocks with beta (slope) that is statistically significant at the 5% level and who have at least 10 years of monthly returns. Regression data is based on the time period from 1972-12/31/17 for nominal yields and June 1990-12/31/17 for real yields.”

Here are the 17 stocks that top the list. 

SEE ALSO: What a $ 2.8 trillion asset manager is watching for proof that the bull market in stocks is really over

Dominion Energy Inc.

Ticker: D

Sector: Utilities

Nominal interest rate beta: -4.1


Mid-America Apartment Communities, Inc.

Ticker: MAA

Sector: Real Estate

Nominal interest rate beta: -4.2


Southern Company

Ticker: SO

Sector: Utilities

Nominal interest rate beta: -4.2


See the rest of the story at Business Insider

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