The sector that sells non-essential goods and services is the consumer discretionary sector.  Stocks in this sector are considered cyclical because they may not be in demand all the time.  Some examples of companies that fall under this sector include Disney, Comcast, Nike, and Starbucks.

Once consumers buy all of their necessities, they can use all of their left-over income in order to buy luxuries that they want, not need.  A change in the federal funds rate would absolutely have a huge effect on this sector.  There will be two different effects.  In the beginning of a rates hike, it will have a positive effect.  The main reason that the Federal Reserve raises rates is to slow down the growing economy.  Since the economy is flourishing, unemployment is on the decline.  More people are content with their financial situation due to their job security and growing wages.  This will lead to more spending on discretionary goods and services.  The first part of the interest rate hike will have a positive impact.  However, the long term outlook is negative.   If rates do get raised, borrowing becomes much more expensive.  This is not a good sign for the discretionary income sector.  If borrowing is more expensive, most of the debt that consumers have to repay will take up much more of their income.  They will have to allocate much more of their income to the necessities in life, rather than buying wanted luxuries.  The lack of demand by the consumers for luxuries will hurt this sector.  An increase in interest rates will be beneficial in the beginning due to increases in spending, but it will have a negative impact in the long-term due to people having less discretionary income.