The Financial Stock That Wins Whether Interest Rates Rise or Fall

One of the big questions surrounding the United States economy in 2026 is what the nominated Federal Reserve chair, Kevin Warsh, will do about interest rates (in coordination with the rest of the Federal Open Market Committee). His predecessor, Jerome Powell, and the FOMC had begun lowering rates in late 2024, but they are currently keeping rates steady based on the economic metrics they are seeing. Will the FOMC be forced to keep interest rates elevated if inflation continues rising this year?

Investors and Wall Street may spend countless hours trying to figure out this puzzle, but the smartest investors know that the best investments are one that manage to thrive with either low or high interest rates. One foolproof financial stock that will win no matter if interest rates are high or low is American Express (NYSE: AXP). Here's why the stock will be a strong one to own through the economic cycle.

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Stimulated spending, inflation protection

The Federal Reserve raises interest rates to combat inflation in an overheating economy. Many businesses can be hurt by rising input costs, with consumers bearing the brunt of these increases as salaries generally grow more slowly than inflation.

American Express is one of the few companies that benefit from a high-interest rate environment and high inflation because of its credit card swipe-fee model. The majority of the credit card giant's revenue comes from the interchange fee earned every time a person uses their American Express credit card. As a percentage of every transaction, rising inflation will accelerate American Express' revenue growth, making the business inflation-proof.

In a lower interest rate environment, when economic spending is stimulated, the company will benefit from increased card spending volume, lower interest rates on bank deposits, and an easier way to expand its loan book. Along with its premium client base, American Express stock is a fantastic business to own across various market environments.

Why American Express is a foolproof stock

Catering to wealthier spenders in the United States, American Express has a business model that helps insulate it from broader economic pain and credit card competition. It has built a differentiated membership model that offers access to airport lounges, hotel discounts, and other benefits that keep its cardholders from switching to other brands.

Its membership perks helped the company add 3.1 million cards in circulation last quarter. The company expects revenue growth of 9% to 10% in 2026, with earnings per share (EPS) of $17.30 to $17.90. Its loan write-off rates are fantastic, making it less susceptible to losses in a recession. Steady growth and inflation protection should make American Express a solid stock to own across market environments.

American Express is an advertising partner of Motley Fool Money. Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.