The Best Energy, Financial, and Healthcare Stocks Amid Rising Interest Rates

The Fed has stepped in to try to cool the overheating economy. In addition to shrinking its balance sheet, the central bank has turned to hiking interest rates to achieve its goal. When rates go up, borrowing gets more expensive, resulting in headwinds in many sectors and tailwinds for others. What are the best investments amid rising interest rates?

The Fed has raised the benchmark rate a few times recently, and more rate hikes are expected. The central bank’s efforts to reduce the money supply in the economy may mean that another stimulus check won’t be coming out of Washington soon, but it may make certain investments more attractive.

A handful of sectors tend to perform well when interest rates are high. There are also sectors that tend to do well whether the economy is doing well or badly. Businesses that are little affected by economic conditions may be ideal to get exposure to if you fear the Fed’s rate hikes could trigger a recession.

Energy and financial companies have traditionally thrived in high interest rates. Meanwhile, healthcare companies' sales tend to stay strong in any economic climate because health expenses are often a budget priority.

As energy is a necessity for factories and households, its demand remains the same, regardless of how much money people and businesses are making. Additionally, energy companies tend to have strong pricing power, allowing them to pass on the higher costs of soaring interest rates to customers.

If you’re in the market for the best energy stocks to buy now, Exxon Mobil (XOM), TotalEnergies (TTE), Shell (SHEL), and ConocoPhillips (COP) are worth a look. These companies not only stand to benefit from high oil prices, but also from Qatar’s expanding gas export business. Chevron (CVX), another energy stock worth considering, has even drawn the interest of Warren Buffett.

When interest rates go up, banks can make more money on loans. JPMorgan (JPM), Bank of America (BAC), and Citigroup (C) are among the largest loan providers in the U.S. economy. Therefore, they’re positioned to reap the benefits of expensive loans.

People still need to buy medication and see the doctor, whether the economy is booming or there's a recession. Therefore, healthcare companies can be an all-weather investment. And companies that supply high-demand products have even more muscle to pass on additional costs from rising rates to customers. If you’re in the market for the best healthcare stocks to buy now, Novo Nordisk (NVO), Thermo Fisher Scientific (TMO), and AstraZeneca (AZN) are worth a look.

Spain-based Novo Nordisk sells drugs for a variety of medical conditions, including diabetes, obesity, and bleeding disorders, U.K-based AstraZeneca has a well-established business with a large portfolio of drugs for various conditions, including multiple types of cancer. AstraZeneca also supplies COVID-19 vaccines. Finally, Thermo Fisher Scientific provides laboratories, clinics, and drug production lines with crucial supplies.