In order to help keep inflation from spiraling out of control, the Fed announced that tapering of asset purchases would likely end by March of the new year. It was also announced that a majority of Fed committee members expect interest rates to increase by at least three-quarters of a percent next year. This implies at least two to three 25 basis point increase in rates in 2022.
Rising interest rates would provide a lift to financial stocks, especially in the banking and insurance industries. Higher interest rates would mean an improvement in net interest income and could provide fuel for a sustained rally in this area of the economy. We feel that investors looking to capitalize on this opportunity should focus on the high-quality names in the sector, including: Aflac (NYSE:AFL), Commerce Bancshares (NASDAQ:CBSH) and JPMorgan Chase & Co. (NYSE:JPM).
Source: InvestorPlace
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