Financial Markets React to Federal Reserve Rate Cuts
On September 17, 2025, the Federal Reserve made a significant move by cutting its benchmark interest rate by 25 basis points. This marked the first rate cut of 2025 and hinted at the possibility of two additional cuts before the year concludes. As interest rates decline, financial markets often experience shifts, with certain plays coming to the forefront for investors.
Impact on Lending Dynamics: Upstart
One standout company in this evolving landscape is Upstart (NASDAQ: UPST). This innovative lending marketplace stands out for its unique approach to evaluating loan applicants. Instead of relying solely on traditional metrics like credit scores and annual income, Upstart utilizes a combination of AI technology and non-traditional data points, such as standardized test scores and previous job experiences.
With the decrease in interest rates, Upstart could see an uptick in loan applications. Unlike traditional banks, Upstart does not hold onto the loans it facilitates; instead, it earns revenue through referral fees from its lending partners. This model makes the company less vulnerable to fluctuations in interest rates. Analysts predict impressive growth for Upstart, expecting its revenue and adjusted EBITDA to grow at compound annual growth rates (CAGRs) of 36% and a staggering 245%, respectively, from 2024 to 2027.
Robinhood: The Popular Trading App
Next in line is Robinhood (NASDAQ: HOOD). As an online brokerage platform that popularized commission-free trading, its revenue primarily stems from two sources: payment for order flow (PFOF) and net interest income from margin loans. While lower interest rates may reduce its interest income, they also facilitate a surge in trading activities.
With more investors looking to venture into stocks and cryptocurrencies during bull market scenarios, Robinhood could see increased usage of its platform. Furthermore, the growth of its subscription-based Gold tier — which provides several perks, including interest-free margin – indicates a positive trajectory for Robinhood’s revenue. Analysts forecast a solid growth trajectory for the company, estimating revenue growth at 22% and adjusted EBITDA growth at 30% between 2024 and 2027.
S&P Global: A Steady Pillar in Financial Markets
Switching gears, S&P Global (NYSE: SPGI) offers a robust array of services, including financial data, credit ratings, and analytics. Catering primarily to Fortune 100 and Fortune 500 companies, its clientele includes major banks and institutional investors. Recently, S&P Global has been integrating AI capabilities, such as its Spark Assist generative AI co-pilot, aiming to enhance user experience and efficiency.
Despite facing headwinds from higher interest rates in 2023 — which slowed down the issuance of corporate debt and, hence, the growth of its credit rating business — S&P Global is poised for a comeback. With the onset of declining interest rates, growth projections are optimistic, with analysts predicting revenue and adjusted EBITDA growth of 7% and 8% respectively from 2024 to 2027.
Navigating the Financial Landscape
As the Federal Reserve moves towards a more accommodative monetary policy, various financial stocks present compelling opportunities. While traditional banks may grapple with mixed outcomes from lower rates, companies like Upstart, Robinhood, and S&P Global could certainly reap the benefits of shifting market dynamics.
Investors interested in this evolving landscape should keep a close watch on these companies as they leverage the changing interest rate environment to fuel their growth trajectories. The interplay between interest rates and financial performance continues to be a fascinating space for analysis and opportunity.
