Not Just Banks: 3 Trading Stocks to Watch After the Fed Rate Hike
The Federal Reserve raised rates by 25 bps on Sept. 16, reversing earlier expectations. Brokers and exchanges like Interactive Brokers (IBKR), Robinhood (HOOD), and CME Group (CME) may benefit from rate hikes. IBKR could see a 2% lift in net interest income (NII) per 25 bps hike, while HOOD's outlook depends on trading volume, and CME benefits from rate path uncertainty.
How this was made
The 30-second read
Why it matters
Higher rates directly boost net interest income for broker‑dealers while increasing demand for hedging products, but also raise the risk of reduced trading volume.
Market read
The surprise rate hike creates immediate trading opportunities in broker‑dealer and derivatives sectors.
What to watch
Potential regulatory changes to margin lending rules could alter the projected benefits.
Background
The Fed’s unexpected 25‑bp hike on Sep 16 reverses prior expectations of cuts, reshaping the rate‑sensitive landscape.
Ticker impact
Interactive Brokers disclosed that a 25‑bp Fed hike adds $81 million to annual net interest income, directly boosting its revenue.
Potential modest upside if rates stay higher, but limited without additional catalyst.
Quantified NII boost is a concrete, newly disclosed figure tied to the Fed decision.
Robinhood reported 9% YoY net interest revenue growth and a doubled margin book, showing mixed exposure to higher rates and trading volume.
Sideways to slightly bullish, contingent on trading volume trends.
Company‑specific data is new, but net effect depends on two opposing drivers.
CME highlighted an 8% YoY rise in daily volume and 30 million contracts traded ahead of the Fed decision, indicating demand for hedging products.
Likely upside as volatility and hedging demand persist.
Direct link between Fed rate uncertainty and CME's core business is newly quantified.
Market effects
Broker‑dealers and exchanges may outperform banks in a rising‑rate cycle.
U.S. equity and fixed‑income markets likely see increased volatility.
Rate‑sensitive assets worldwide may adjust pricing models.
Counterpoint
If rate hikes trigger a credit slowdown, broker‑dealer margins could compress despite NII gains.
Key entities
- RegulatorFederal Reserve
Implemented the 25‑bp rate increase.
- CompanyInteractive Brokers
Broker‑dealer benefiting from higher NII.
- CompanyRobinhood Markets
Mixed exposure to rates and trading volume.
- CompanyCME Group
Derivatives exchange gaining from rate uncertainty.
