Economics
Wall Street Falls in Love Again With Companies Loaded Up on Debt
- It’s a victory of sorts for the Fed as officials cut rates
- Inexpensive financing will help most indebted companies
Photographer: Paul Yeung/Bloomberg
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The Federal Reserve’s new round of interest-rate reductions just might be working. At least, that’s what one obscure, but key, stock market indicator suggests.
For the first time since 2016, companies with fragile balance sheets are outperforming their sturdier peers and the broad market, a pair of Goldman Sachs indexes show. That’s a clear sign that the rate cuts are shoring up investor confidence in heavily indebted companies -- the segment of corporate America that’s perhaps most at risk to any downturn that hits the U.S. economy.