Federal Reserve Rate Hike Expectations Rise
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 6 days ago
0mins
Source: Fool
- Inflation Data Surprises: The Personal Consumption Expenditures Price Index revealed a 4.1% year-over-year increase in May, with a 3.4% rise excluding food and energy, both significantly above the Fed's 2% target, potentially forcing an earlier rate hike to combat persistent inflation.
- Strong Labor Market: An average of over 188,000 net jobs added monthly over the past three months indicates a resilient labor market, providing the Fed with the confidence to raise rates, suggesting that the economy can withstand higher interest rates.
- Market Rate Hike Expectations: Futures markets are pricing in a 63% chance of a rate hike at the September meeting, with an 80% likelihood of a higher benchmark rate in a year, reflecting strong investor sentiment regarding future rate increases that could impact overall market dynamics.
- Financial Stocks Benefit: Rising interest rates will likely widen the net interest margins for major banks like JPMorgan Chase and Bank of America, boosting profits; the Financial Select Sector SPDR ETF has risen 4.2% in the past month, outperforming the broader market, indicating potential gains for financial stocks in a higher rate environment.
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Analyst Views on SCHW
Wall Street analysts forecast SCHW stock price to rise
16 Analyst Rating
14 Buy
1 Hold
1 Sell
Strong Buy
Current: 97.000
Low
91.00
Averages
116.64
High
148.00
Current: 97.000
Low
91.00
Averages
116.64
High
148.00
About SCHW
The Charles Schwab Corporation is a savings and loan holding company. The Company, through its subsidiaries, engages in wealth management, securities brokerage, banking, asset management, custody, and financial advisory services. The Company provides financial services to individuals and institutional clients through two segments: Investor Services, and Advisor Services. The Investor Services segment provides retail brokerage, investment advisory, and banking and trust services to individual investors, and retirement plan and business services, as well as other corporate brokerage services, to businesses and their employees. The Advisor Services segment provides custodial, trading, banking and trust, and support services to independent registered investment advisors (RIAs), independent retirement advisors, and recordkeepers. Its products and services include brokerage, mutual funds, exchange-traded funds (ETFs), managed investing solutions, alternative investments, banking, and trust.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Surge in New Accounts: In May 2026, Schwab opened 461,000 new brokerage accounts, a 37% increase compared to May 2025, with each new account providing additional revenue opportunities through commissions and management fees, further fueling income growth.
- Record Trading Volume: Schwab achieved a record daily average of 11.8 million trades in May, indicating strong market engagement and reflecting customer trust and reliance on its platform during a period of heightened trading activity.
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- Coca-Cola Hits New High: Coca-Cola shares have risen 7.4% over the past three months, reaching a new high, while the S&P Staples sector remained flat, showcasing Coca-Cola's robust performance and stable consumer demand in a challenging market.
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- Index Performance Surge: Schwab's Trading Activity Index (STAX) rose to 59.12 in June, significantly up from May's 55, marking a multi-year high that reflects strong investor interest in stocks, potentially driving the company's stock price higher.
- Investor Behavior Insights: As a unique behavioral index, STAX analyzes stock positions and trading activities from Schwab's millions of client accounts, revealing actual investor actions and market positioning, which indicate shifts in market sentiment.
- Clear Buying Trend: Data shows Schwab investors actively bought index and ETF options during market pullbacks, particularly in tech, communications, and consumer discretionary stocks, indicating a search for opportunities in the current market environment.
- Generational Differences: STAX data reveals that Generation X investors exhibited particularly bullish sentiment in June, highlighting differences in market participation among age groups, which could influence future investment strategies and market dynamics.
See More
Schwab Trading Activity Index Hits Multi-Year High
- Index Performance: Schwab's Trading Activity Index (STAX) rose to 59.12 in June, up from slightly over 55 in May, marking a multi-year high that indicates strong investor interest and market confidence.
- Investor Behavior Analysis: STAX serves as a unique behavioral index that analyzes stock positions and trading activities from Schwab's millions of client accounts, revealing actual investor actions and market positioning, thus reflecting dynamic market changes.
- Market Participation: Schwab clients were net buyers during market pullbacks, particularly in index and ETF options, demonstrating a strong appetite for tech, communications, and consumer discretionary stocks, with Generation X investors showing notable bullishness.
- Market Trend Impact: While STAX may not be a core index to monitor, its multidimensional characteristics can reveal investor trends and habits that influence market sentiment, reflecting Schwab's active role and investor confidence in the market.
See More
Schwab Clients' Trading Activity Surges with Strong Net Buys
- Index Activity Surge: The Schwab Trading Activity Index (STAX) rose to 59.12 in June, up 7.33% from May's 55.08, indicating a robust increase in retail investor buying sentiment and reflecting a recovery in market confidence.
- Sustained Buying Pressure: Throughout June, Schwab clients' net buys outpaced net sells by more than two-to-one, particularly during mid-month market pullbacks, suggesting that investors remain optimistic about future market conditions despite volatility.
- Sector Performance Divergence: Information Technology, Communication Services, and Consumer Discretionary led the net-buy list in June, while Financials, Health Care, and Consumer Staples saw net selling, indicating a preference for tech stocks and caution towards traditional sectors among investors.
- Generational Investment Trends: STAX scores rose across all age groups in June, with Generation X showing the most bullish sentiment, reaching a two-year high, reflecting varying risk appetites and investment strategies among different generations.
See More
Charles Schwab's Growth Potential Amid Trading Boom
- Customer Asset Growth: As of May 2026, Charles Schwab's customer accounts totaled $13.1 trillion, reflecting a 27% year-over-year increase primarily driven by rising stock prices and new account openings, showcasing the company's robust performance amid the retail trading boom.
- Surge in New Accounts: In May 2026, Schwab opened 461,000 new brokerage accounts, a 37% increase compared to May 2025, with each new account providing additional revenue opportunities through commissions and management fees, further fueling income growth.
- Record Trading Volume: Schwab achieved a record daily average of 11.8 million trades in May, indicating strong market engagement and reflecting customer trust and reliance on its platform during a period of heightened trading activity.
- Significant Valuation Advantage: While Robinhood presents a larger growth opportunity, Schwab's price-to-earnings ratio stands at just 19x, significantly lower than Robinhood's 54x, suggesting that investors should not overlook Schwab's strong growth and relatively undervalued position when considering brokerage investments.
See More
Charles Schwab Benefits from Retail Trading Boom
- Customer Asset Growth: As of May 2026, Charles Schwab's customer accounts totaled $13.1 trillion, showcasing its strong position in the retail trading market, significantly surpassing Robinhood's $344 billion assets, indicating Schwab's industry leadership.
- Surge in New Accounts: Schwab opened 461,000 new brokerage accounts in May 2026, a 37% increase from May 2025, which not only boosts commission revenue but also enhances its competitive edge in the market.
- Record Trading Volume: The company achieved an average daily trading volume of 11.8 million trades in May, reflecting a significant increase in customer activity and ensuring continued growth in trading commissions and related service revenues.
- Valuation Advantage: Schwab's price-to-earnings ratio stands at 19x, significantly lower than Robinhood's 54x, indicating that while Robinhood may have greater growth potential, Schwab's stability and maturity make it a more attractive investment choice.
See More
