3 Financial Stocks That Could Soar After the Fed's Interest Rate Cut

Group 1 - The Federal Reserve cut its benchmark rate by 25 basis points on September 17, marking its first rate cut of 2025, with two more cuts expected by year-end, matching the three cuts in 2024 [1] - Lower interest rates can lead to increased lending activity for traditional banks but will reduce their net interest income, making savings accounts and CDs less appealing [2] - Despite challenges for traditional banks, there are financial stocks like Upstart, Robinhood, and S&P Global that may benefit from declining interest rates [3] Group 2 - Upstart operates as a lending marketplace that uses AI to approve loans based on non-traditional data points, allowing it to approve a wider range of loans [4] - Upstart generates most of its revenue from referral fees rather than interest on loans, positioning it to benefit from increased loan applications as interest rates decline [5] - After struggling in 2022 and 2023 due to rising interest rates, Upstart's growth accelerated in 2024, and the Fed's rate cuts are expected to provide strong tailwinds for its business [6] - Analysts project Upstart's revenue and adjusted EBITDA to grow at CAGRs of 36% and 245% from 2024 to 2027, driven by declining interest rates and an increase in "super prime" borrowers [7] - Other companies like Robinhood and S&P Global are also expected to see increased activity and growth as interest rates decline [8]