The Federal Open Market Committee expects three more interest rate cuts in the near future, influencing the stock market, particularly benefiting real estate and small-cap stocks. The last rate cut in December 2024 brought the Fed’s benchmark rate down to 4% to 4.25%. The FOMC dot plot shows two more rate cuts in 2025 and one in 2026, with rates ending around 3.4% in 2026. The Real Estate Select Sector SPDR Fund (XLRE) includes REITs that avoid corporate taxes and could benefit from lower interest rates. The Vanguard Small Cap Value ETF (VBR) invests in small-cap value stocks that could see advantages from rate cuts, holding stocks like NRG Energy and Williams-Sonoma. Investors should consider potential high returns from other stocks recommended by the Motley Fool Stock Advisor team before investing in VBR.

Read more at Nasdaq: These 2 ETFs Could Outperform as Jerome Powell Lowers Rates