With inflation proving stickier than expected, Wall Street is once again confronting the possibility of higher interest rates for longer. This could reshape the earnings outlook for financial companies, benefiting businesses with strong deposit franchises, interest-sensitive revenue streams and substantial liquidity.

The latest October Consumer Price Index (CPI) report, released on Nov. 10, 2026, showed that inflation remains persistent. The headline CPI increased 0.4% month over month, following a 0.6% rise in September. Core CPI, which excludes food and energy, increased 0.3% for the third consecutive month. Food prices advanced 0.5%, while energy prices rose 0.7% after September’s sharp 5.2% increase.

The inflation numbers have strengthened expectations of further monetary tightening. A Reuters poll of 101 economists conducted from Nov. 6-10 found that most expected the Fed to raise interest rates by 25 basis points in December, potentially taking the federal funds target range to 4.00%-4.25%. Meanwhile, Fed Governor Christopher Waller indicated support for another increase, citing persistent inflationary pressures.

This backdrop warrants attention to financial stocks with solid liquidity. Here, we have chosen JPMorgan Chase (JPM Quick QuoteJPM - Free Report) , Charles Schwab (SCHW Quick QuoteSCHW - Free Report) and Berkshire Hathaway (BRK.B Quick QuoteBRK.B - Free Report) , which are expected to demonstrate resilience amid persistent inflation and rising interest-rate risks.

Why Rising Rates Matter for Financial Stocks

Higher interest rates can improve banks' net interest margins by allowing them to earn more on loans and interest-bearing assets. However, the benefit depends on how quickly asset yields reprice relative to deposit and wholesale funding costs. A prolonged tightening cycle can also increase borrowing costs for households and businesses, potentially weakening loan demand and increasing credit losses.

Recent results from Charles Schwab illustrate this. In the third quarter of 2026, the brokerage firm reported a 14% year-over-year increase in net interest revenue. Growth was supported by stronger demand for margin and bank lending. However, the company also reported that higher average wholesale borrowings and lower yields on floating-rate assets partially offset the gains, as lending demand outpaced deposit growth. This clearly shows why higher interest rates do not automatically translate into stronger profitability for financial companies.

For brokerage firms, higher rates can improve returns on interest-earning client balances, but clients may move idle cash into higher-yielding money-market funds and fixed-income products. Meanwhile, insurers and investment holding companies can benefit from attractive reinvestment yields, although their existing portfolios and broader operating businesses remain exposed to market conditions.

Thus, higher interest rates create both opportunities and challenges for financial companies, making stock selection particularly important. Investors should prioritize companies with strong balance sheets, diversified revenue streams, disciplined funding strategies and the ability to sustain earnings across changing interest-rate cycles.

Our 3 Picks

JPMorgan Chase: The company is well-positioned to cope with changing interest-rate conditions because of its diversified banking operations, substantial deposit base and strong capital position. JPM reported third-quarter 2026 net income of $15.3 billion, or $5.57 per share, while net revenues increased 8% year over year. Net interest income (NII) increased 6%, supported by higher deposit balances and loan growth, despite the impact of lower interest rates during the quarter.

JPMorgan's average deposits increased 8% year over year in the third quarter, while average loans grew 10%. Its Common Equity Tier 1 (CET1) capital ratio was 13.9% under the standardized approach, providing a substantial capital cushion. A higher-for-longer interest-rate environment could support asset yields and NII as loans and other interest-earning assets reprice. The stock carries a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for 2026 EPS implies a 22.7% over the year-ago reported figure.

Charles Schwab: In the third quarter of 2026, Schwab’s core net new assets totaled $190.4 billion, reflecting continued client asset gathering. Net interest revenues increased 14% during the quarter, supported by growth in margin and bank lending. However, lower yields on floating-rate assets and higher average wholesale borrowings partially offset the gains. For the first nine months of 2026, net interest revenues rose 16% to approximately $10 billion.

A potentially higher-for-longer interest-rate environment could provide Schwab with an opportunity to further strengthen net interest revenue through higher yields on interest-earning assets and continued growth in margin lending, provided funding costs remain manageable. The stock carries a Zacks Rank #3. The Zacks Consensus Estimate for 2026 EPS implies a 31.6% increase over the year-ago reported figure.

Berkshire Hathaway: The company enjoys substantial liquidity, diversified operating businesses and the financial flexibility to deploy capital when attractive opportunities emerge. As of Sept. 30, 2026, Berkshire's insurance and other businesses held approximately $352.3 billion in cash, cash equivalents and U.S. Treasury Bills, net of relevant unsettled purchases. Its insurance businesses alone held $230.9 billion in these assets.

This substantial liquidity allows Berkshire to preserve capital, generate investment income and pursue acquisitions or equity investments when attractive opportunities emerge. The stock currently carries a Zacks Rank #2 (Buy). The company's earnings estimate revisions also offer some encouragement. The Zacks Consensus Estimate for 2026 EPS increased 3.8% over the past three months.  

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.