Fed Rate Hike Triggers Market Expectations of More Rate Increases

The Federal Reserve raised interest rates for the first time in three years by a quarter point, bringing the target range to 3.75% to 4%. The move was expected to trigger higher rates, and the market is now anticipating at least one more rate hike this year and potentially two.

While higher rates typically put pressure on stocks, some companies have business models that perform better in a rising-rate environment. Two such stocks are Visa (NYSE: V) and Wells Fargo.

Visa's business model is resilient in an elevated-rate environment because it charges a fixed rate for transactions, which rises with inflation. In its third quarter of fiscal 2026, payments volume and processed transactions rose 10% year over year, while net revenue jumped 14%. The company's Chief Financial Officer, Chris Suh, expects net revenue growth to be in the low-double-digit percentage range.

Wells Fargo is another bank that could benefit from higher rates. Rising interest rates can create a beneficial environment for banks when the yield curve is steep, allowing them to earn more on their loans and investments. However, rising rates can also increase deposit costs and lead to customer credit stress.