If The Fed Hikes Again, These 3 Financial Stocks Should S…
JPMorgan Chase controls what customers earn
JPMorgan Chase is a diversified banking giant. However, a key part of its business model is offering basic banking services, checking accounts, deposit accounts, and certificates of deposit. The consumer and banking business alone holds nearly $1.1 trillion in deposits at the end of the first quarter of 2026.
This is interesting because the basic banking model is fairly simple. A bank JPMorgan takes deposits and lends that money out. It pays depositors less than what it earns in interest on the loans it makes, with the difference representing profits for the bank. If the Federal Reserve increases interest rates, JPMorgan’s ability to earn money on the loans it makes increases. But it doesn’t have to increase the rate it pays depositors. Or, at the very least, it doesn’t need to increase what it pays by as much as its income increases.
In other words, higher rates could be supportive of JPMorgan’s business. But it isn’t the only financial company that’s positioned well for an increase in rates.
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NYSE: JPM
JPMorgan Chase
Today’s Change
(0.75%) $2.23
Current Price
$298.95
Key Data Points
Market Cap
$802B
Day’s Range
$295.20 – $299.59
52wk Range
$260.31 – $337.25
Volume
371.6K
Avg Vol
9.3M
Dividend Yield
1.97%
American Express has an attractive high-end model
American Express issues credit cards largely to higher-net-worth customers. Such customers tend to be more resilient to financial distress, allowing them to keep spending regardless of the economic environment. This is a double benefit because American Express also processes its customers’ card transactions, generating fee income. If the Federal Reserve increases interest rates, it won’t have much impact on the company’s core business model.
However, rate increases are specifically meant to slow economic growth. If economic growth slows too much, it can lead to a recession. Generally speaking, that would be a bad outcome for consumer spending and could lead to slower transaction volume. But American Express’ high-net-worth customers are ly to keep spending more than less wealthy consumers, who are being more directly impacted by the economic weakness. Even in the worst-case scenario, American Express should be a relatively strong performer.
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NYSE: AXP
American Express
Today’s Change
(0.43%) $1.34
Current Price
$316.46
Key Data Points
Market Cap
$216B
Day’s Range
$312.60 – $319.13
52wk Range
$286.15 – $387.49
Volume
114.4K
Avg Vol
3.4M
Gross Margin
60.19%
Dividend Yield
1.08%
Progressive gets the benefit of the float
Progressive is an insurance company. It collects premiums from customers up front and pays out under its policies when a claim is made. In the meantime, the company gets to hold onto the premiums and invest them. Progressive can’t be too risky with its investments, as it will eventually need the cash to pay claims. Normally, a significant portion of this money, often called “the float,” is held in short-term debt investments.
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NYSE: PGR
Progressive
Today’s Change
(-2.16%) $-4.21
Current Price
$190.30
Key Data Points
Market Cap
$111B
Day’s Range
$189.26 – $195.49
52wk Range
$189.20 – $289.96
Volume
167.8K
Avg Vol
2.9M
Dividend Yield
7.30%
In the first quarter of 2026, Progressive generated just over $900 million in investment income. The float and the income it generates are an important part of the company’s business model. If the Federal Reserve increases interest rates, Progressive can earn more interest on the float without taking on any additional investment risk. In other words, a rate hike is actually a big win for the insurer.
Rate hikes aren’t all bad news
While the general perception is that Federal Reserve rate increases are bad for the finance industry, that isn’t true across the board. Some companies, JPMorgan and Progressive, may actually benefit. Others, American Express, should see little impact. You don’t have to fear a rate hike; just be prepared for one, which may include adding some of these resilient financial companies to your portfolio.
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About the Author
Reuben Gregg Brewer is a contributing Motley Fool stock market analyst covering energy, utilities, REITs, and consumer staples. He is the former director of research at Value Line Publishing, where he rose from mutual fund analyst to equity analyst before leading all research operations. Reuben holds a bachelor’s degree in psychology from SUNY Purchase, a master’s in social work from Columbia University, and an MBA from Regis University. He has been featured as a financial expert on CNBC and in the Financial Times, Barron’s, and InvestmentNews.
Stocks Mentioned
Progressive
NYSE: PGR
$190.30
(-2.16%)-$4.21
Motley Fool Stock Advisor’s Latest Pick
—% Avg Return
JPMorgan Chase
NYSE: JPM
$298.96
(+0.75%)+$2.23
American Express
NYSE: AXP
$316.46
(+0.43%)+$1.34
*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.
Sumber Artikel:
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