The Fed again has taken a tightening stance for monetary policy. Policymakers lifted the fed funds target range to 3.75%-4% last week -- and history suggests that more rate hikes are coming. Ahead of the rate move last week, Argus Fed Watcher Kevin Heal changed his forecast to two rate increases of 25 basis points each before the end of 2026. His rationale is that employment is surprisingly healthy while inflation has been obstinate and the bond market has agita. We do not expect that two rate hikes will derail earnings growth or stunt innovation. Kevin says that two increases should keep the Fed from falling out of step if inflationary shocks persist, while not over-medicating the economy if inflation moderates. In sum, the economy is still strong and the Fed is doing its job by trying to keep inflation in check. Given the return to tightening monetary policy, we are looking at industries and companies that can do well during a period of higher interest rates. All of the following stocks carry Argus BUY ratings.

Sherwin-Williams is the largest global manufacturer of paints and coatings. The company focuses on the development, manufacturing, and distribution of paint, coatings, and related products to customers ranging from professional painters and contractors to industrial manufacturers to do-it-yourself consumers. Sherwin organizes its operations into three primary segments: the paint stores group is the largest segment and includes the company’s network of over 4,800 company-owned stores; the consumer brands group sells branded architectural paints through big-box retailers such as Lowe’s, and the performance coatings group provides specialized coatings for industrial applications, such as automotive refinishing, packaging, and industrial wood.

Sherwin-Williams is the largest U.S. producer of paint, coatings, and related products. The company has approximately 64,000 employees and operates over 5,000 retail stores and facilities in over 120 countries. Sherwin-Williams supplies coatings directly to retailers, distributors, industrial and commercial customers, and other industry professionals. The company acquired Valspar in 2017. SHW shares are a component of the S&P 500.

The major stock indices are all higher at midday on Friday. Most eyes were on Kevin Warsh this morning as he spoke at Jackson Hole. After his speech, in which he noted that inflation is too high, the financial press reported that the market now sees a 57.4% chance that the Fed will raise interest rates following its Sept. 16 meeting. By the end of the year, the likelihood of rates rising is now at 86.2%. Before the meeting, those chances were at 35.9% and 75.4%, respectively. But beyond rate speculation, Chairman Warsh was more talkative than many thought would be the case, and his comments are being viewed as confirmation that the economy is strong. And we agree. In a recent Argus Viewpoint report, Argus' Chief Economist Chris Graja, CFA, noted that the economy is resilient. Indeed, after almost six months of high gasoline prices, unemployment remains low and stock prices are high, helped by record earnings and healthy margins. Chris also detailed that indicators driven by a broad array of data point to an economy in which consumers are finding ways to make ends meet. Meanwhile, earnings season is essentially over and the results have been pretty much all and more that most investors could expect.