The Fed Just Hiked for the First Time Since 2023. Here Is How to Re-Check Every Stock You Own

On September 16, 2026 the Federal Reserve raised the federal funds rate by a quarter point to a 3.75–4.00% target range. It was the first increase since 2023, the vote was unanimous, and the projections that came with it showed 16 of 18 officials expecting at least one more hike before the year is out. If you own individual stocks, this is not a headline to file away. It is a reason to re-open the balance sheet of every company you hold and ask one question: what does this business look like when money costs more?

Why a quarter point matters more than it sounds

A 25-basis-point hike is small on its own. What matters is the direction and the level. The direction has flipped: the easing cycle that began in 2024 is over, and the committee is signalling that the next move is more likely up than down. The level is what changes the arithmetic. A 5% risk-free yield on a 10-year Treasury is a real alternative to owning equities, and every company that borrows now refinances into a market where lenders can get 5% for taking almost no risk.

Rates reach a stock through three separate channels, and it helps to keep them apart:

1. The interest-expense channel. Debt that was issued at 2–3% in 2020–2021 will eventually be rolled over at 5–7%. For a company with a lot of debt and thin operating profit, that alone can erase earnings.
2. The valuation channel. A stock is worth the present value of its future cash flows. When the discount rate rises, that present value falls, and it falls most for companies whose cash flows sit far in the future. We cover the math in what a 5% Treasury yield does to stock valuations.
3. The demand channel. Higher rates cool the parts of the economy that run on credit: housing, autos, big-ticket retail, commercial real estate. A company can have a spotless balance sheet and still see its customers disappear.

The five checks below map onto those channels. Every number comes from the 10-K and 10-Q filings a company submits to the SEC, which is exactly what the company pages on Investor Sam are built from. Open a holding in another tab and follow along.

Check 1 — Interest coverage: can operating profit pay the interest bill several times over?

Interest coverage = operating income ÷ interest expense. It is the single fastest way to tell whether a rate hike is a nuisance or a threat. Above 10×, interest is a rounding error. Between 3× and 10×, the company is fine today but has less room for a bad year. Below 3×, a refinancing at higher rates starts competing with dividends, buybacks and capital spending for the same dollars.

Pulling the latest full-year figures from our ratios pages gives a sense of the spread even among large, well-known companies:

The Intel row is the one to dwell on. A coverage ratio that cannot be computed is not a data gap; it is the answer. When a company is running an operating loss, every dollar of interest is paid out of cash on hand or new borrowing, and a higher rate on the next bond issue makes the hole deeper. That does not make the stock un-investable — it made a spectacular run in the past year on turnaround hopes — but it does mean the investment case rests entirely on the turnaround, not on the financials as they stand.

Check 2 — Net debt to EBITDA: how many years of cash profit would it take to repay the debt?

Coverage tells you about today’s interest bill. Leverage tells you how exposed the company is when that bill is repriced. Net debt = total debt − cash; dividing it by EBITDA (earnings before interest, taxes, depreciation and amortisation) gives a rough “years to repay” figure. Under 1× is conservative; 1–2.5× is normal for a stable business; above 3× deserves a hard look in a rising-rate world, unless the cash flows are unusually predictable.

Computing it from the net debt and EBITDA figures on our ratios pages:

• Net cash (more cash than debt): Costco, AMD, Nvidia, Tesla, Amazon. Rates hurt these only through valuation and demand.
• Under 0.5×: Microsoft (0.1×), Meta (0.2×), Exxon (0.35×), Apple (0.4×). Effectively unleveraged for their size.
• 1–2×: Chevron (1.0×), Texas Instruments (1.4×), Broadcom (2.0×), Home Depot (2.0×). Manageable, but each of these will feel the refinancing channel over the next few years.
• Above 3×: Intel (3.8×, on depressed EBITDA). This is where a rate hike changes the story.

Check 3 — When does the debt come due, and is any of it floating?

Two companies with identical leverage can have completely different rate exposure. One issued 30-year fixed bonds at 3% in 2021 and will not refinance until the 2050s. The other has a revolving credit line priced at a spread over SOFR that reset the week the Fed moved. You will not find this on a ratio page; you find it in the debt footnote of the 10-K (usually titled “Debt” or “Borrowings”), which lists every note, its coupon and its maturity, plus a table of principal due by year.

What to look for:

• A maturity wall. If a third of the debt matures in the next 24 months, the company will be refinancing into today’s rates whether it likes it or not. Estimate the hit: (amount maturing) × (new coupon − old coupon).
• Floating-rate share. Term loans and revolvers usually float. The footnote will say what fraction is variable; some companies also disclose a sensitivity (“a 100-basis-point increase would raise annual interest expense by $X”) in the market-risk section, Item 7A.
• Commercial paper. Short-term paper is cheap until it is not. Heavy reliance on it means the interest bill reprices within months.

You can ask Ask Sam on any company page to pull the debt-maturity language straight from the filing rather than hunting for it yourself; the answer is grounded in the 10-K text, with the section cited.

Check 4 — Earnings yield against the 5% Treasury

Flip the P/E ratio upside down and you get the earnings yield — the profit the company earns each year per dollar of share price. A stock at 20× earnings yields 5%; at 40× it yields 2.5%. Compare that with the 5% you can lock in on a 10-year Treasury with no business risk at all. The gap between the two is the equity risk premium you are being paid for owning the stock, and right now, for a lot of popular names, that gap is small or negative.

Using the P/E on each company’s ratios page (computed at the fiscal-year-end share price, so check the live page for today’s figure): Meta at 28× earns 3.6%, Qualcomm at 33× earns 3.1%, Nvidia at 38× earns 2.6%, Costco at 51× earns 2.0%, and AMD at 76× earns 1.3%. Exxon at 18× earns 5.7% and Bank of America at 14× earns 7.1%. None of that settles whether a stock is cheap — a fast-growing company can deserve a 2% earnings yield today because the yield will be 6% on today’s price in five years. But it does tell you how much growth you are paying for, and a higher Treasury yield raises the bar that growth has to clear.

The stock screener lets you sort the whole universe by P/E, so you can find which of your holdings are priced for the most growth. The compare tool puts two or three of them side by side.

Check 5 — Is the business itself rate-sensitive?

The last check is about customers, not the company’s own debt. Some businesses sell things people buy with borrowed money, and those businesses slow down when borrowing gets expensive regardless of how clean their own balance sheet is.

• Housing and home improvement. With the 30-year mortgage back above 7%, existing-home turnover is the number to watch. Home Depot’s share price is down roughly 28% over the past year on our momentum pillar, and it carries about 2× net debt to EBITDA — a company being squeezed from both the demand and the refinancing channels at once.
• Autos and consumer credit. Higher auto-loan rates hit unit sales; higher card rates hit delinquencies.
• Discretionary retail. Nike’s own guidance calls for low-to-mid single-digit revenue declines over the next three quarters, citing a softer consumer. That was before the hike.
• Real estate and utilities. Both compete directly with bond yields for income-seeking investors and both borrow heavily; a 5% Treasury is a direct competitor for their shareholders’ money.
• The relatively insulated. Software subscriptions, consumer staples, health care, and energy at $100 oil are less exposed on the demand side, though not on the valuation side.

Putting it together: a one-page rate audit

For each holding, write down five things: interest coverage, net debt to EBITDA, the share of debt maturing or floating in the next two years, earnings yield versus 5%, and a one-line judgment on whether customers borrow to buy. Then sort the list. The names that score badly on three or more are the ones that deserve a fresh decision, not necessarily a sale — a great business at 2× leverage with a maturity wall may still be a great business, but you should own it knowing that its earnings will absorb a higher interest bill for the next several years.

What the Fed’s own projections say about the next year

The median projection now puts the funds rate at 4.1% at the end of both 2026 and 2027; eight officials pencilled in another increase next year and only four see cuts. Whether that materialises depends on energy. The August CPI report attributed more than a third of the monthly rise to gasoline, and oil near $100 a barrel on the Iran conflict is the reason the committee “lowered the bar” for a hike after holding in July. If the Strait of Hormuz reopens and crude falls back toward $80, the pressure eases. If it does not, the projections are more likely to be revised up than down. Either way, the balance-sheet audit above is worth doing now rather than after the next meeting.

Frequently asked questions

Does a rate hike always push stocks down?

No. The Nasdaq set a record close on September 21, five days after the hike, on the strength of the AI chip rally. Hikes compress valuations at the margin, but earnings growth and sector news can overwhelm that effect for months. The point of the audit is not to predict the index; it is to know which of your holdings are structurally exposed.

Where do the interest coverage and net debt figures come from?

From each company’s most recent annual 10-K as filed with the SEC. Investor Sam computes the ratios directly from the reported income statement and balance sheet; the source line items are on the income statement, balance sheet and cash flow tabs of every company page.

Should I sell stocks with high leverage?

That is a decision only you can make, and this article is education, not advice. What we would say is that leverage was cheap to ignore for fifteen years and is not any more. Know the number, know the maturity schedule, and decide with your eyes open.

Sources

• Federal Reserve Board — FOMC statement and Summary of Economic Projections, September 16, 2026.
• U.S. Bureau of Labor Statistics — Consumer Price Index, August 2026 (released September 11, 2026).
• U.S. Department of the Treasury — daily Treasury par yield curve rates, September 2026.
• Company 10-K and 10-Q filings via SEC EDGAR for META, XOM, COST, QCOM, CVX, TXN, INTC, HD, AVGO, NKE and others named above; ratios as computed on Investor Sam from those filings.