CME Group Inc., together with its subsidiaries, operates contract markets for the trading of futures and options on futures contracts worldwide. It offers futures and options products based on interest rates, equity indexes, foreign exchange, agricultural commodities, energy, and metals, as well as fixed income and foreign currency trading services. The company also provides clearing house services, including clearing, settling, and guaranteeing futures and options contracts, and cleared swaps products traded through its exchanges; and trade processing and risk mitigation services. In addition, the company offers a range of market data services, including real-time and historical data services. It serves professional traders, financial institutions, institutional and individual investors, corporations, manufacturers, producers, governments, and central banks. The company was formerly known as Chicago Mercantile Exchange Holdings Inc. and changed its name to CME Group Inc. in July 2007. The company was founded in 1898 and is headquartered in Chicago, Illinois.

CME Group looks like a high-quality but already expensive business: operating margin and net margin remain very high, and ROE, ROA, and ROI are noticeably above industry benchmarks. Revenue, net income, and operating profit have generally grown compared with earlier periods, confirming the resilience of the exchange infrastructure model and its ability to generate cash flow. At the same time, the trend does not look linearly accelerating: several indicators show quarter-to-quarter fluctuations rather than an unequivocal trend toward strong improvement. Debt load is low on a debt/equity basis, which is a strong positive for financial stability, although current liquidity looks only around normal, and the quick ratio is effectively zero, which for such a business model requires caution in interpretation. Dividend yield is low, so the dividend factor supports the valuation only moderately and is not the main driver of revaluation. The main limiting factor is the multiples: P/E, P/S, P/B, and P/FCF are significantly above the industry median, meaning the market has already priced in a high level of quality and stability. This is especially important for CME because, with such strong margins, further upside is usually limited less by improvements in operating metrics than by maintaining current quality and avoiding disappointments. Growth in assets and equity supports the fundamental picture, but liabilities are also increasing, so the balance sheet cannot be called completely risk-free. Overall, the company is fundamentally strong, but the valuation looks stretched and calls for a more conservative approach to the target price. For an investor, this is more a story of defensive quality and stable cash flows than of undervalued growth. Therefore, the base forecast should be raised slightly, but without aggressive revaluation, since the current price already reflects a significant portion of the business’s strengths.

CME Group Inc.

Сильный индекс, незначительно упал. Быки в растерянности.

Strong index, slightly down. The bulls are confused.

Сильный индекс, без изменений. Медведи в растерянности.

Strong index, flat. The bears are confused.

Сильный индекс, без изменений. Рынок на стороне быков.

Strong index, flat. The market is on the bulls' side.

Сильный индекс, без изменений. Рынок не поддерживает медведей.

Strong index, flat. The market does not support the bears.

Сильный индекс, незначительно упал. Приток средств в лонги на высоком уровне.

Strong index, slightly down. Inflow of funds into longs at a high level.

Сильный индекс, незначительно вырос. Отток средств из шортов на высоком уровне.

Strong index, slightly up. Outflow of funds from shorts at a high level.

CME demonstrates strong margins, high profitability, and low debt, but trades at a significant premium to the sector, so upside potential appears limited.

Key Points
Interactive Brokers operates the world's largest digital platform for investing in stocks, options, futures, and cryptocurrency.
The company is enjoying accelerating growth in client trading volumes and revenue amid the recent stock market volatility.
Interactive Brokers stock looks cheap on a forward basis, so patient investors could earn a very strong return from here, even if the broader market continues to decline.
The stock market has experienced significant volatility this year, as geopolitical tensions in the Middle East, rising inflation, concerns about potential interest rate hikes, and elevated valuations have set investors on edge. As a result, the S&P 500 is down 3% from its recent record high at recent prices, while the Nasdaq-100 is down by 9%.
But some companies benefit from heightened volatility, and Interactive Brokers (NASDAQ: IBKR), which operates the world's largest digital platform for investing in stocks, options, futures, cryptocurrency, and more, is one of them. It just reported stellar operating results for the second quarter of 2026 (ended June 30), showing a sharp acceleration in revenue growth.
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With major catalysts like U.S. midterm congressional elections coming up in November, the stock market is likely to remain somewhat unsettled. But even if the indexes extend their recent declines to 20%, which would constitute a technical bear market, here's why I think Interactive stock will still trend higher.
Trading activity exploded during the second quarter
Interactive Brokers earns a commission whenever its clients buy or sell a stock, options contract, futures contract, or cryptocurrency, so periods of heightened trading activity are typically great for its business.
The company processed 4.82 million daily average revenue trades during the second quarter, which was up by a brisk 34% from the year-ago period. That growth rate marked a sharp acceleration from 24% in the first quarter, just three months earlier, so it appears investors were aggressively repositioning their portfolios amid all of the market uncertainty.
Interactive also ended the second quarter with a record 5.19 million client accounts, which was up 30% from the same time last year. Large swings in the financial markets often grab news headlines, which attracts new investors who might have been waiting on the sidelines for an opportunity to buy stocks.
It appears those investors still feel very comfortable taking on risk, because Interactive's clients were holding $108.5 billion in margin loans as of June 30, which was up by an eye-popping 67% year over year. Investors usually borrow money to buy stocks and other financial securities when they feel supremely confident that the market is going higher. Whether they are right remains to be seen, but in the meantime, Interactive will earn interest on that enormous loan balance.
Revenue growth just accelerated sharply
Interactive's total revenue climbed by 28% year over year to $1.9 billion during the second quarter. Growth accelerated from 17% in the first quarter, so this is another metric that highlights the company's incredible momentum.
There were two primary components to Interactive's second-quarter revenue:
Commission revenue, which rose by 30% to $673 million.
Net interest revenue, which rose by 23% to $1.06 billion. This represents the interest Interactive earns on margin loans, client cash balances, and its own corporate cash.
The company's commission revenue will continue growing quickly if stock market volatility remains elevated, but its net interest revenue could also receive a boost if the Federal Reserve raises interest rates. Fed Chairman Kevin Warsh says rate hikes might be necessary to tame the recent spike in inflation, and the CME Group's FedWatch tool is now pointing to two potential hikes before 2026 is over.
This will allow Interactive to charge clients a higher interest rate on their margin loans, and it will also increase deposit rates, so the company will earn more on its cash balances.
Interactive stock looks attractive on a forward basis
Interactive generated earnings of $0.69 per share during the second quarter, which was a 35% jump from the year-ago period. Its trailing-12-month earnings now amount to $2.51 per share, placing its stock at a price-to-earnings (P/E) ratio of 36.7. It isn't necessarily cheap considering the Nasdaq-100 index has a P/E ratio of 33.1, but I'm not surprised investors are willing to pay a premium given the accelerating growth in many of the company's core operating metrics.
Wall Street thinks Interactive could grow its earnings to $3.17 per share in 2027 (according to Yahoo! Finance), placing its stock at a forward P/E ratio of 29.1. In other words, investors who are willing to hold Interactive stock for at least the next 18 months might actually be paying an attractive price for it today.
Plus, Wall Street's forward earnings estimate might prove too conservative if the company continues to process record transaction volume, and also if interest rates remain elevated into next year.
Interactive stock has returned 37% so far in 2026, and I think it's poised to continue performing well even if the broader market slips into bear territory.
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Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CME Group and Interactive Brokers Group. The Motley Fool recommends the following options: long January 2027 $43.75 calls on Interactive Brokers Group and short January 2027 $46.25 calls on Interactive Brokers Group. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

1 Unstoppable Growth Stock That Could Soar if a Bear Market Is Coming

Key Points
Later today (July 29), the FOMC will announce its latest decision on interest rates.
Although the probability of a Fed rate hike has tripled over the last week, the backward-looking economic data needed to confidently raise interest rates isn't yet in policymakers' hands.
The absence of forward-looking guidance, courtesy of Fed Chair Kevin Warsh, is making things challenging for Wall Street and investors.
Today is a pivotal day for Wall Street's major stock indexes, the Dow Jones Industrial Average (DJINDICES: ^DJI), S&P 500 (SNPINDEX: ^GSPC), and Nasdaq Composite (NASDAQINDEX: ^IXIC), as well as consumers. Mere hours from now, the 12 voting members of the Federal Open Market Committee (FOMC) will render their verdict on interest rates.
Although the probability of the Fed raising the federal funds target rate on July 29 has effectively tripled over the last week from 12.8% to 37.9%, according to the CME Group's FedWatch Tool, it's unlikely that policymakers will increase interest rates. This prediction of inaction boils down to one fundamental factor that governs the FOMC: it's a reactive, not proactive, body.
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Economic data, not guesswork, guides monetary policy decisions
From a statistical standpoint, economic data points to eventual rate hikes -- just not at the July FOMC meeting.
On the one hand, energy supply issues are rearing their head once more. Iran has, yet again, shut down the Strait of Hormuz to most maritime traffic, thereby choking off the daily flow of up to 20 million barrels of petroleum liquids. Higher oil prices translate into steeper costs at the fuel pump for businesses and consumers, with no end to the Middle East military conflict in sight.
We've also witnessed the early stages of Trumpflation evolving. Inflation that's specifically driven by President Donald Trump's policies (Trumpflation) is no longer just an energy issue. The stickiness of Core Personal Consumption Expenditures (PCE) in the wake of a decline in headline inflation in June suggests that inflationary pressures have spilled over into the broader economy.
BREAKING: US May PCE inflation, the Fed's preferred inflation metric, rises to 4.1%, the highest reading since April 2023.
Core PCE inflation rose to 3.4%, its highest since October 2023.
US inflation is now officially running at more than double the Fed's 2% target.
-- The Kobeissi Letter (@KobeissiLetter) June 25, 2026
But while we have evidence that fuel prices are climbing, once again, policymakers lack the tangible, broad-based, backward-looking evidence they would need to adjust interest rates. For example, June Core PCE won't be released until July 30, one day after the two-day FOMC meeting concludes.
Additionally, headline inflation dipped from 4.2% in May to 3.5% in June. Without hard evidence of a reacceleration to this figure, which we'll likely see in July's inflation data (reported in mid-August), courtesy of rapidly rising energy prices, the FOMC is apt to stand pat on interest rates.
Fed Chair Kevin Warsh is making things challenging for Wall Street
What makes this interest rate decision even more challenging for Wall Street and investors is that Fed Chair Kevin Warsh has done away with forward-looking guidance.
For more than two decades, it had been customary for the FOMC to include language in its meeting statements that hinted at its next move (i.e., easing or tightening bias). Warsh axed this language at his first FOMC meeting as Fed chair in June, arguing that forward-looking guidance can potentially hamstring policymakers into decisions that don't fit dynamic economic data.
BREAKING: Fed Chair Kevin Warsh announces that the Fed has "dropped" forward guidance.
"Forward guidance is not the business we should be in," he says.
-- The Kobeissi Letter (@KobeissiLetter) June 17, 2026
With a relatively tight-lipped Fed chair and no forward-looking guidance, this marks one of the most uncertain interest rate decisions of the century. While it's unlikely the Fed will adjust interest rates later today (July 29) without economic data to react to, there's an exceptionally high probability of a rate hike at the Sept. 15-16 FOMC meeting.
If and when interest rates do rise, it could stymie the partially debt-financed artificial intelligence data center build-out and halt the Dow's, S&P 500's, and Nasdaq Composite's parabolic rallies in their tracks.
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Sean Williams has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CME Group. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The Federal Reserve Should Raise Interest Rates Today, but It Won't for One Fundamental Reason

Key Points
New Fed Chair Kevin Warsh has been intentionally tight-lipped about where he thinks interest rates should go this year.
However, if Warsh wanted to move forward with a rate hike this year, he may have the necessary votes on the Federal Open Market Committee.
The Federal Open Market Committee’s (FOMC) July meeting has officially begun and will conclude on Wednesday, July 29, with a decision on interest rates, followed by a press conference with new Fed Chair Kevin Warsh.
It will only be Warsh’s second meeting as chair, but a lot has already happened in his tenure.
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Warsh has already begun to pull the Fed away from the stock market by making it clear he intends to provide much less forward guidance. Warsh has also created several new task forces to examine major potential changes in how the Fed conducts its business.
Already, the lack of forward guidance has put a portion of the market on edge. Will Warsh shock investors tomorrow with a surprise rate hike?
Official White House photo by Daniel Torok.
The market sees a chance
According to CME Group’s FedWatch tool, which uses 30-day futures to track the likelihood of changes to the Fed’s benchmark lending rate, the federal funds rate, there is a 68.5% the Fed leaves rates unchanged, as of this writing.
That leaves a 31.5% chance the Fed hikes rates by a quarter point, within a range of 3.75% to 4%.
On Kalshi, 76% of people betting on the Fed’s July rate decision expect the Fed to hold rates steady, while roughly a quarter see a hike. Keep in mind that these probabilities in FedWatch and Kalshi change frequently.
Now, the FOMC has 12 voting members, so Warsh can’t make a decision on his own, but other FOMC members do appear to favor such a move.
Lorie Logan, president of the Federal Reserve Bank of Dallas, has publicly said she thinks a rate hike at the July meeting would be prudent. Cleveland Fed President Beth Hammack has also indicated that she believes inflation is too high.
In mid July, Bank of America Senior Economist Stephen Juneau said in a research note that he thinks Warsh would be able to drum up the necessary votes on the FOMC to move forward with a rate hike if he wanted to.
Very recently, Frank Flight, the head of macro strategy at Citadel Securities, said in a research note, "The market may once again be underestimating the extent of the hawkish shift at the Fed."
Flight also noted that Warsh could use a July hike to “… emphatically end the forward guidance era" and also show he is committed to Fed independence.
Will Warsh actually make a move?
Despite potentially having the votes on the FOMC, I still find it very unlikely that Warsh pushes a quarter-point rate hike through this week.
For one, the FOMC at Warsh’s first meeting as chair held rates steady in June, just days after data showed that headline inflation in May spiked to 4.2%, the highest level seen in three years.
While this isn’t the only data point important for inflation, it would seem an odd move for the Fed to hike rates now, given that inflation in June slowed and showed a reprieve beyond energy prices.
Additionally, a rate hike, with midterm elections looming, would surely put Warsh in the crosshairs of President Donald Trump, who has advocated for the Fed to cut rates since his second term began.
Finally, there’s still a chance that the U.S. and Iran reach some kind of longer-term ceasefire or peace agreement that brings oil and gas prices down. The Fed won’t want to move too hastily because the longer interest rates remain elevated, the higher the chance of a recession.
While rate hikes are certainly possible later this year, I see no need for the Fed to move forward with one now.
Should you buy stock in CME Group right now?
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*Stock Advisor returns as of July 28, 2026.
Bank of America is an advertising partner of Motley Fool Money. Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CME Group. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Will New Fed Chair Kevin Warsh Shock the Market and Deliver a Surprise Rate Hike at the Fed's July Meeting?

For Immediate Release
Chicago, IL – July 28, 2026 – Today, Zacks Equity Research discusses CME Group CME, Intercontinental Exchange ICE, Nasdaq Inc. NDAQ and Cboe Global Markets CBOE.
Industry: Securities & Exchanges
Link: https://www.zacks.com/commentary/2961412/4-securities-exchanges-stocks-to-watch-despite-intense-competition
A compelling and diversified product portfolio helps drive the revenues of Zacks Securities and Exchanges industry players. A rise in trading volumes, product expansion through prudent acquisitions and the increased adoption of a greater number of crypto assets are expected to benefit CME Group, Intercontinental Exchange, Nasdaq Inc. and Cboe Global Markets.
Increased focus on accelerating their non-trading revenue base, which comprises market technology, listing and information revenues, infuses dynamism in the business profile of the industry players. The industry is also witnessing increased retail trading. However, alterations in investment patterns and priorities and compliance with regulations pose challenges. With the increasing digitization of financial markets, cyber threats and data breaches continue to pose serious risks.
Mergers and acquisitions are gaining momentum across the industry, with companies leveraging strategic partnerships and acquisitions to fuel growth and innovation. These initiatives help unlock new markets, protect domestic market share, diversify product offerings and reinforce trading platforms. Deloitte observes that exchanges are increasingly embracing consolidation to adapt to rapidly changing technological, regulatory and competitive environments.
About the Industry
The Zacks Securities and Exchanges industry comprises companies that operate electronic marketplaces, which facilitate the buying and selling of stocks, stock options and bonds or commodity contracts. They facilitate trading across a diverse range of products in multiple asset classes and geographies. The companies generate revenues from fees received from the listed companies on their exchanges.
They also provide a range of data and listing services to global financial and commodity markets, including pricing and reference data, exchange data, analytics, feeds, index services, investments, risk management, desktops, and connectivity solutions, as well as corporate and ETF listing services, on the cash equity exchanges. The industry is witnessing increased adoption of crypto assets. Yet, industry players have to comply with a number of regulations, resulting in challenges
4 Trends Shaping the Future of the Securities and Exchanges Industry
Volatility Fueling Trading Volume: Industry revenues primarily come from trade execution, clearing and settlement, listings and trading technology. Elevated volatility typically increases trading volumes and transaction-based fees. A supportive cryptocurrency backdrop, driven by broader adoption and lighter regulation, could further strengthen activity. Exchanges are also investing in tokenization, stablecoins and digital payments to connect traditional finance with blockchain markets. Technavio expects the global securities exchanges market to reach $49.6 billion by 2028, reflecting a 12.1% CAGR. However, declining volatility could reduce trading activity and pressure transaction revenues.
Intense Competition: Traditional exchanges face growing competition from alternative trading systems, off-exchange market makers, newly launched exchanges and digital-asset platforms. These rivals compete aggressively through lower fees, liquidity incentives, faster execution and specialized products. As trading activity spreads across more venues, liquidity fragmentation can reduce the market share and pricing power of established exchanges while increasing the cost and complexity of maintaining competitive technology and connectivity.
Diversification Into Other Recurring Revenue Sources: Securities exchanges are increasingly focusing on recurring revenues to lower reliance on unpredictable trading-driven income. With market volumes often fluctuating, stable revenue streams from data services, listings, clearing, and technology platforms offer consistent cash flows and stronger earnings stability. These revenues also support growth by addressing rising demand for market data, compliance, ESG offerings and digital asset infrastructure.
The players are strengthening their presence in the evolving landscape and thereby enhancing scalability and margins. Increasing focus on accelerating the non-trading revenue base also infuses dynamism in the business profiles of the industry participants. In fact, exchanges are focusing on market data monetization and earning more from data feeds and analytics.
Continuous Investment in Technology, AI in Particular: Industry players are intensifying technology investments to enhance competitiveness and adaptability. There is growing emphasis on creating strategic market models through advanced tools, especially AI, while continually upgrading products and services. Exchanges are increasingly leveraging AI and blockchain to strengthen efficiency and resilience.
Recent advancements use machine learning, automation and algorithms to improve trading accuracy, reduce cyber threats and limit human errors, thereby accelerating trading speed. Moreover, industry players are focusing on automating non-trading operations, which significantly contribute to revenue generation and support sustainable long-term growth.
Zacks Industry Rank Indicates Bleak Prospects
The Zacks Securities and Exchanges industry is housed within the broader Zacks Finance sector. It carries a Zacks Industry Rank #208, which places it in the bottom 16% of the 247 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, reflects dull near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
The industry’s positioning in the bottom 50% of the Zacks-ranked industries is a result of a negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts have been losing confidence in this group’s earnings growth potential. Estimates for 2026 have decreased 1.7% since April.
Before we present a few securities and exchanges stocks worth considering for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.
Industry Underperforms Sector and S&P 500
The Zacks Securities and Exchanges industry has underperformed the broader Zacks Finance sector as well as the Zacks S&P 500 composite year to date.
The industry has lost 11.5% against the broader sector’s increase of 6.1% and the Zacks S&P 500 composite’s rise of 7.6% in the said time frame.
Industry's Current Valuation
On the basis of trailing 12-month price-to-earnings (P/E), which is commonly used for valuing exchange stocks, the industry is currently trading at 20.08X compared with the S&P 500’s 20.22X and the sector’s 16.58X.
Over the last five years, the industry has traded as high as 29.62X, as low as 17.59X and at the median of 24.19X.
4 Securities and Exchanges Stocks to Keep An Eye On
We are presenting one Zacks Rank #2 (Buy) stock and three Zacks Rank #3 (Hold) stocks from the Securities and Exchange industry. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Nasdaq: Headquartered in New York, Nasdaq is a leading provider of trading, clearing, marketplace technology, regulatory, securities listing, information, and public and private company services. Its strategy of accelerating its non-trading revenue base, successfully maximizing opportunities as a technology and analytics provider, growing core marketplace businesses and intensifying its focus on Market Technology and Information Services businesses should continue to drive this Zacks Rank #2 stock.
The Zacks Consensus Estimate for 2026 and 2027 earnings per share indicates an increase of 15.8% and 13.2%, respectively, year over year. NDAQ came up with a four-quarter average earnings surprise of 5.67%. The expected long-term earnings growth rate is pegged at 16%, better than the industry average of 12.7%. The consensus mark for 2026 and 2027 earnings has moved 3.9% and 4.8% north, respectively, in the past 30 days.
Cboe Global Markets: Based in Chicago, IL, Cboe Global is one of the largest stock exchange operators by volume in the United States and globally for ETP trading. This Zacks Rank #3 stock is poised for growth, given its expanding product line across asset classes, broadening geographic reach and a diversifying business mix with recurring revenues and technology.
The Zacks Consensus Estimate for the company’s 2026 and 2027 EPS indicates a year-over-year increase of 28% and 5.8%, respectively. The expected long-term earnings growth rate is pegged at 18.9%, better than the industry average. The consensus mark for 2026 and 2027 earnings has moved 1.6% north each, respectively, in the past 30 days. It came up with a four-quarter average earnings surprise of nearly 5.35%.
CME Group: Headquartered in Chicago, IL, CME Group is the largest futures exchange in the world in terms of trading volume as well as notional value traded. Its efforts to expand future products in emerging markets, non-transaction-related opportunities, OTC offerings, cross-selling through alliances, global presence and liquidity should drive growth.
The Zacks Consensus Estimate for 2026 and 2027 EPS indicates a year-over-year increase of 9.6% and 4.7%, respectively. This Zacks Rank #3 company came up with a four-quarter average earnings surprise of 1.27%. The expected long-term earnings growth rate is pegged at 6.7%. The consensus mark for 2026 and 2027 earnings has moved 0.8% and 0.3% north, respectively, in the past seven days.
Intercontinental Exchange: This Atlanta, GA-based company is a leading global operator of regulated exchanges, clearing houses and listings venues and a provider of data services for commodity, financial, fixed-income and equity markets. Its compelling portfolio, expansive risk-management services, strategic buyouts and a solid balance sheet bode well. It is the second-largest global fixed-income provider. This Zacks Rank #3 company, with the largest mortgage network across the United States, remains well-positioned to benefit from accelerated digitization in the U.S. residential mortgage industry.
The Zacks Consensus Estimate for the company’s 2026 and 2027 EPS indicates a year-over-year increase of 15.3% and 8.9%, respectively. It came up with a four-quarter average earnings surprise of 3.44%. The expected long-term earnings growth rate is pegged at 12%.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Beyond Nvidia: AI's Second Wave Is Here
The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Zacks Industry Outlook Highlights CME Group, Intercontinental Exchange, Nasdaq and Cboe Global Markets

A compelling and diversified product portfolio helps drive the revenues of Zacks Securities and Exchanges industry players. A rise in trading volumes, product expansion through prudent acquisitions and the increased adoption of a greater number of crypto assets are expected to benefit CME Group CME, Intercontinental Exchange ICE, Nasdaq Inc. NDAQ and Cboe Global Markets CBOE. Increased focus on accelerating their non-trading revenue base, which comprises market technology, listing and information revenues, infuses dynamism in the business profile of the industry players. The industry is also witnessing increased retail trading. However, alterations in investment patterns and priorities and compliance with regulations pose challenges. With the increasing digitization of financial markets, cyber threats and data breaches continue to pose serious risks.
Mergers and acquisitions are gaining momentum across the industry, with companies leveraging strategic partnerships and acquisitions to fuel growth and innovation. These initiatives help unlock new markets, protect domestic market share, diversify product offerings and reinforce trading platforms. Deloitte observes that exchanges are increasingly embracing consolidation to adapt to rapidly changing technological, regulatory and competitive environments.
About the Industry
The Zacks Securities and Exchanges industry comprises companies that operate electronic marketplaces, which facilitate the buying and selling of stocks, stock options and bonds or commodity contracts. They facilitate trading across a diverse range of products in multiple asset classes and geographies. The companies generate revenues from fees received from the listed companies on their exchanges. They also provide a range of data and listing services to global financial and commodity markets, including pricing and reference data, exchange data, analytics, feeds, index services, investments, risk management, desktops, and connectivity solutions, as well as corporate and ETF listing services, on the cash equity exchanges. The industry is witnessing increased adoption of crypto assets. Yet, industry players have to comply with a number of regulations, resulting in challenges
4 Trends Shaping the Future of the Securities and Exchanges Industry
Volatility Fueling Trading Volume: Industry revenues primarily come from trade execution, clearing and settlement, listings and trading technology. Elevated volatility typically increases trading volumes and transaction-based fees. A supportive cryptocurrency backdrop, driven by broader adoption and lighter regulation, could further strengthen activity. Exchanges are also investing in tokenization, stablecoins and digital payments to connect traditional finance with blockchain markets. Technavio expects the global securities exchanges market to reach $49.6 billion by 2028, reflecting a 12.1% CAGR. However, declining volatility could reduce trading activity and pressure transaction revenues.
Intense Competition: Traditional exchanges face growing competition from alternative trading systems, off-exchange market makers, newly launched exchanges and digital-asset platforms. These rivals compete aggressively through lower fees, liquidity incentives, faster execution and specialized products. As trading activity spreads across more venues, liquidity fragmentation can reduce the market share and pricing power of established exchanges while increasing the cost and complexity of maintaining competitive technology and connectivity.
Diversification Into Other Recurring Revenue Sources: Securities exchanges are increasingly focusing on recurring revenues to lower reliance on unpredictable trading-driven income. With market volumes often fluctuating, stable revenue streams from data services, listings, clearing, and technology platforms offer consistent cash flows and stronger earnings stability. These revenues also support growth by addressing rising demand for market data, compliance, ESG offerings and digital asset infrastructure. The players are strengthening their presence in the evolving landscape and thereby enhancing scalability and margins. Increasing focus on accelerating the non-trading revenue base also infuses dynamism in the business profiles of the industry participants. In fact, exchanges are focusing on market data monetization and earning more from data feeds and analytics.
Continuous Investment in Technology, AI in Particular: Industry players are intensifying technology investments to enhance competitiveness and adaptability. There is growing emphasis on creating strategic market models through advanced tools, especially AI, while continually upgrading products and services. Exchanges are increasingly leveraging AI and blockchain to strengthen efficiency and resilience. Recent advancements use machine learning, automation and algorithms to improve trading accuracy, reduce cyber threats and limit human errors, thereby accelerating trading speed. Moreover, industry players are focusing on automating non-trading operations, which significantly contribute to revenue generation and support sustainable long-term growth.
Zacks Industry Rank Indicates Bleak Prospects
The Zacks Securities and Exchanges industry is housed within the broader Zacks Finance sector. It carries a Zacks Industry Rank #208, which places it in the bottom 16% of the 247 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, reflects dull near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
The industry’s positioning in the bottom 50% of the Zacks-ranked industries is a result of a negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts have been losing confidence in this group’s earnings growth potential. Estimates for 2026 have decreased 1.7% since April.
Before we present a few securities and exchanges stocks worth considering for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.
Industry Underperforms Sector and S&P 500
The Zacks Securities and Exchanges industry has underperformed the broader Zacks Finance sector as well as the Zacks S&P 500 composite year to date.
The industry has lost 11.5% against the broader sector’s increase of 6.1% and the Zacks S&P 500 composite’s rise of 7.6% in the said time frame.
Year-to-Date Price Performance
Industry's Current Valuation
On the basis of trailing 12-month price-to-earnings (P/E), which is commonly used for valuing exchange stocks, the industry is currently trading at 20.08X compared with the S&P 500’s 20.22X and the sector’s 16.58X.
Over the last five years, the industry has traded as high as 29.62X, as low as 17.59X and at the median of 24.19X, as the chart below shows.
12-Month Forward Price-to-Earnings (P/E) Ratio
12-Month Forward Price-to-Earnings (P/E) Ratio
4 Securities and Exchanges Stocks to Keep An Eye On
We are presenting one Zacks Rank #2 (Buy) stock and three Zacks Rank #3 (Hold) stocks from the Securities and Exchange industry. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Nasdaq: Headquartered in New York, Nasdaq is a leading provider of trading, clearing, marketplace technology, regulatory, securities listing, information, and public and private company services. Its strategy of accelerating its non-trading revenue base, successfully maximizing opportunities as a technology and analytics provider, growing core marketplace businesses and intensifying its focus on Market Technology and Information Services businesses should continue to drive this Zacks Rank #2 stock.
The Zacks Consensus Estimate for 2026 and 2027 earnings per share indicates an increase of 15.8% and 13.2%, respectively, year over year. NDAQ came up with a four-quarter average earnings surprise of 5.67%. The expected long-term earnings growth rate is pegged at 16%, better than the industry average of 12.7%. The consensus mark for 2026 and 2027 earnings has moved 3.9% and 4.8% north, respectively, in the past 30 days.
Price and Consensus: NDAQ
Cboe Global Markets: Based in Chicago, IL, Cboe Global is one of the largest stock exchange operators by volume in the United States and globally for ETP trading. This Zacks Rank #3 stock is poised for growth, given its expanding product line across asset classes, broadening geographic reach and a diversifying business mix with recurring revenues and technology.
The Zacks Consensus Estimate for the company’s 2026 and 2027 EPS indicates a year-over-year increase of 28% and 5.8%, respectively. The expected long-term earnings growth rate is pegged at 18.9%, better than the industry average. The consensus mark for 2026 and 2027 earnings has moved 1.6% north each, respectively, in the past 30 days. It came up with a four-quarter average earnings surprise of nearly 5.35%.
Price and Consensus: CBOE
CME Group: Headquartered in Chicago, IL, CME Group is the largest futures exchange in the world in terms of trading volume as well as notional value traded. Its efforts to expand future products in emerging markets, non-transaction-related opportunities, OTC offerings, cross-selling through alliances, global presence and liquidity should drive growth.
The Zacks Consensus Estimate for 2026 and 2027 EPS indicates a year-over-year increase of 9.6% and 4.7%, respectively. This Zacks Rank #3 company came up with a four-quarter average earnings surprise of 1.27%. The expected long-term earnings growth rate is pegged at 6.7%. The consensus mark for 2026 and 2027 earnings has moved 0.8% and 0.3% north, respectively, in the past seven days.
Price and Consensus: CME
Intercontinental Exchange: This Atlanta, GA-based company is a leading global operator of regulated exchanges, clearing houses and listings venues and a provider of data services for commodity, financial, fixed-income and equity markets. Its compelling portfolio, expansive risk-management services, strategic buyouts and a solid balance sheet bode well. It is the second-largest global fixed-income provider. This Zacks Rank #3 company, with the largest mortgage network across the United States, remains well-positioned to benefit from accelerated digitization in the U.S. residential mortgage industry.
The Zacks Consensus Estimate for the company’s 2026 and 2027 EPS indicates a year-over-year increase of 15.3% and 8.9%, respectively. It came up with a four-quarter average earnings surprise of 3.44%. The expected long-term earnings growth rate is pegged at 12%.
Price and Consensus: ICE
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

4 Securities & Exchanges Stocks to Watch Despite Intense Competition

Key Points
The Vanguard Value ETF owns 308 value stocks.
This ETF is likely to perform better than most if interest rates increase.
Value stocks have outgained growth stocks over the long run.
Warren Buffett's recommendation that many investors are better off putting their money into an S&P 500 (SNPINDEX: ^GSPC) index fund makes sense. Ordinarily, I'd be on the Buffett bandwagon and suggest a low-cost index fund such as the Vanguard S&P 500 ETF (NYSEMKT: VOO).
But is an S&P 500 ETF the best kind of fund to buy right now? I don't think so. If I had only $500 to invest right now, I'd go in a different direction. My pick for the best ETF to buy in today's market is the Vanguard Value ETF (NYSEMKT: VTV).
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Why value offers value
As its name suggests, the Vanguard Value ETF owns value stocks -- 308 of them, to be precise. Its top holdings currently include Micron Technology (NASDAQ: MU), JPMorgan Chase (NYSE: JPM), Berkshire Hathaway (NYSE: BRKA) (NYSE: BRKB), Johnson & Johnson (NYSE: JNJ), and ExxonMobil (NYSE: XOM).
Although value stocks and ETFs haven't been top performers over the last decade, that's no longer the case today. Of Vanguard's top 20 highest-returning ETFs in 2026, eight are value funds (including the Vanguard Value ETF).
One factor behind the resurgence of value stocks and funds is that the S&P 500 is priced at a premium. The S&P 500 Shiller CAPE (cyclically adjusted price-to-earnings) ratio, one of the most respected valuation metrics, is at its second-highest level ever.
I especially like the Vanguard Value ETF for the value stocks it holds. Financial stocks make up 21.4% of its portfolio. These stocks are likely to benefit more than most if interest rates rise -- and CME Group's (NASDAQ: CME) FedWatch estimates an 80% chance of the Federal Reserve increasing rates in September, an 86% chance in October, and a 91% chance in December.
But the Vanguard Value ETF outperformed the ETFs that held only financial stocks during the period when interest rates rose in 2022 and 2023. I think one reason why is that the Vanguard Value ETF's diversification into other sectors helps, particularly defensive sectors such as healthcare.
Thinking short-term and long term
The short-term interest rate dynamics make the Vanguard Value ETF my top pick right now. However, I think this fund could also be a good long-term holding.
Multiple studies have found that value stocks outgain growth stocks over long periods. Although that hasn't been the case in recent years, we could see a return to the norm going forward. With a low annual expense ratio of only 0.03%, the Vanguard Value ETF is a great way to invest in a diversified basket of value stocks.
Should you buy stock in Vanguard Value ETF right now?
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The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Vanguard Value ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $377,990!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,269,518!*
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*Stock Advisor returns as of July 27, 2026.
JPMorgan Chase is an advertising partner of Motley Fool Money. Keith Speights has positions in Berkshire Hathaway and ExxonMobil. The Motley Fool has positions in and recommends Berkshire Hathaway, CME Group, JPMorgan Chase, Micron Technology, Vanguard S&P 500 ETF, and Vanguard Value ETF. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

If I Only Had $500 to Invest, This Is the ETF I'd Buy Right Now

Key Points
In just one week, the probability of higher interest rates by mid-September has surged from 52.4% to 82.4%.
Escalating military action between the U.S. and Iran has reignited energy price inflation -- but this is only part of the story.
Trumpflation has entered a new phase, and Wall Street's leading catalyst is also fanning the flames of inflation.
It's been another stellar year for the timeless Dow Jones Industrial Average (DJINDICES: ^DJI), broad-based S&P 500 (SNPINDEX: ^GSPC), and growth-driven Nasdaq Composite (NASDAQINDEX: ^IXIC), which have hit all-time highs since early June. But the party may be nearing a conclusion, based on the latest interest rate projections.
According to the CME Group's FedWatch Tool, which uses 30-day Fed funds futures prices to track the probability of Federal Reserve rate hikes at upcoming Federal Open Market Committee (FOMC) meetings, there's now an 82.4% chance of an FOMC rate hike by the Sept. 16 meeting. That's up from a 52.4% probability of higher interest rates by mid-September, as of July 16.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
This sudden surge in Fed rate-hike probability boils down to three factors.
The Iran war energy supply shock isn't over
To begin with, Iran-war-driven energy supply concerns are ramping back up.
Shortly after President Donald Trump green-lit attacks on Iran five months ago, the latter closed the Strait of Hormuz to most maritime traffic. This move stymied the transport of a fifth of the world's liquid petroleum demand, sending fuel prices soaring at the fastest pace in more than three decades.
In June, the U.S. and Iran made headway on peace talks, driving crude oil prices down to pre-Iran-war levels. Although fuel prices are known to rise like a rocket and fall like a feather, the decline in crude oil prices nevertheless eased pain at the pump and lowered trailing 12-month U.S. inflation from 4.2% in May to 3.5% in June.
With fighting between the U.S. and Iran escalating in July, energy prices are once again climbing rapidly.
Just over past week, rate hike probability jumped from 12% to 36% per @CMEGroup #FedWatchTool pic.twitter.com/auq9pnXEnO
-- Liz Ann Sonders (@LizAnnSonders) July 23, 2026
Trumpflation has entered its next phase
Additionally, Trumpflation (inflation driven by Trump's policies) has entered its next phase, and FOMC policymakers likely know it.
While headline inflation declined in June, the forecast for Core Personal Consumption Expenditures (PCE), which excludes volatile food and energy costs, has hardly budged. This suggests that Iran-war-driven inflation has filtered into the broader economy. More importantly, it indicates this inflation won't be short-lived.
Higher costs for petroleum-based products (e.g., plastics and synthetic polymers) and costlier transportation routes are expenses that are eventually passed on to consumers.
Artificial intelligence is contributing to inflationary pressures
Furthermore, Wall Street's biggest catalyst, artificial intelligence (AI), is fanning the flames of inflation.
On the one hand, AI hardware demand outstripping supply has sent graphics processing unit (GPU) and memory prices through the roof. Investors in AI infrastructure stocks have made out like bandits.
But there's a literal price to be paid for this success. The otherworldly pricing power that GPU and memory/storage companies possess is translating into higher costs for consumers. In other words, AI demand is driving above-average inflation.
If the Fed raises interest rates, it could slow the AI infrastructure build-out, forcing investors to rethink AI growth rates and the historically unsustainable valuations of AI stocks.
Should you buy stock in S&P 500 Index right now?
Before you buy stock in S&P 500 Index, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and S&P 500 Index wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $377,990!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,269,518!*
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Sean Williams has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CME Group. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

There's Now an 82% Chance of a Fed Rate Hike by mid-September -- Here's Why

Key Points
Inflation remains the most pressing topic facing the Federal Reserve.
CME’s FedWatch tool shows a greater-than-90% probability that the federal funds rate will be higher at the end of 2026.
Long-term investors shouldn’t really pay much attention to what central bankers say or do.
Since taking over as Federal Reserve Chairman two months ago, Kevin Warsh has been under the microscope. Investors continue to pay close attention to any fresh commentary from the U.S. central bank. This can provide clues as to what might be coming.
Kevin Warsh recently testified before Congress, his first time doing so as part of a semiannual process. Investors can take what he said as a clear signal on where interest rates could go.
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It's all about prices
During the testimony, Warsh reiterated the Fed's focus on maintaining independence from any political influence. It's encouraging to know that this remains a priority. However, we'll have to wait and see how things play out. The White House might continue to apply pressure.
But what stood out was the attention given to prices across the economy. "The members of our Committee have no tolerance for persistently elevated inflation," he said. "And we share a resolute commitment to restoring price stability."
If investors were ever wondering where Kevin Warsh's head was at, there's now no doubt that his goal is to curb above-average inflation, which is still meaningfully higher than the central bank's 2% target. The Consumer Price Index increased 3.5% year over year in June. Shelter and food are areas where households continue to see prices rise.
There was speculation that President Trump nominated Kevin Warsh with the understanding that the new Fed chair would lower interest rates sooner rather than later. This doesn't seem likely. CME Group's FedWatch tool is showing a 90% probability that the fed funds rate will be higher at the end of this year.
What's interesting, however, is that the market appears to be shrugging off this hawkish monetary policy. The S&P 500 (SNPINDEX: ^GSPC) has climbed 10% in 2026 as of July 22.
Monetary policy is fluid
The Federal Reserve today is signaling that interest rates won't fall anytime soon. The best investors understand that this situation can change without notice. Conflict in the Middle East adds an element of uncertainty. This can keep impacting energy prices.
Moreover, other factors can contribute to declining inflation. For instance, advances in artificial intelligence can drive unprecedented productivity gains, lowering prices. If these sorts of things were to happen, the central bank would be more comfortable lowering the fed funds rate. No one can predict what will happen, though.
Long-term investors shouldn't be concerned. If you own high-quality stocks in a diversified portfolio, what the Federal Reserve says and does is mostly just noise.
Should you buy stock in S&P 500 Index right now?
Before you buy stock in S&P 500 Index, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and S&P 500 Index wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $377,990!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,269,518!*
Now, it’s worth noting Stock Advisor’s total average return is 896% — a market-crushing outperformance compared to 206% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of July 26, 2026.
Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CME Group. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Fed Chair Kevin Warsh Sends a Clear Signal on Where Interest Rates Are Headed

Key Points
Bitcoin supporters continue to patiently wait for the top digital asset to enter a new bull market.
So much capital has flowed to the AI trade, drawing attention away from the dominant cryptocurrency.
With inflation still well above the Federal Reserve’s 2% target, Bitcoin holders can’t bank on lower interest rates in the near future.
Is Bitcoin (CRYPTO: BTC) ready to break out to the upside? This is what the bulls are hoping for, especially as the world's top cryptocurrency has climbed 11% since the start of July (as of the afternoon of July 22). Bitcoin currently sits just under $66,000 per unit.
Where does the oldest, most valuable digital asset go from here? To be clear, no one knows. But these two factors have gotten in the way of sustainable price appreciation.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
1. AI has been attracting capital
The biggest theme in markets remains the artificial intelligence (AI) boom. Earnings season is upon us, so shareholders in these businesses will be paying close attention to spending plans, product and service updates, and demand trends, among other variables, to ensure the story remains intact.
Of the top 10 positions in the S&P 500 (SNPINDEX: ^GSPC), all are directly exposed to the AI revolution. Combined, these businesses carry a gargantuan market capitalization of more than $25 trillion. AI has certainly attracted significant amounts of capital.
Since Bitcoin hit a record high in October last year, its price has fallen 47%. During the same time, the tech-heavy Invesco QQQ Trust rose by 16%. The market is favoring the latter.
If the biggest AI companies report better-than-expected financial figures this earnings season, it could reinforce a notable headwind for Bitcoin. Capital will keep flowing to AI stocks. And the leading cryptocurrency will continue to face an uphill battle to win over investors.
2. Eyes on the Federal Reserve
During the month of June, the Consumer Price Index increased by 3.5%. This marked a deceleration from the previous month, but it's still well above the Federal Reserve's long-run 2% target. Investors can't overlook inflation, which has been a persistent theme in the economy.
Bitcoin holders, all else equal, favor a more accommodative central bank that's on a path to lower interest rates. This pushes capital from investment opportunities viewed as safer and yield-generating to those further out on the risk curve. When rates are lower, investors seek higher returns by considering uncertain assets.
This situation can benefit Bitcoin. However, the CME Group's FedWatch tool reveals that there's a more than 90% probability that the fed funds rate will be higher in December than it is today. Investors might not want to bank on looser monetary policy.
Bitcoin faces near-term pressure. But the long-term bulls will take the current dip as an opportunity to keep buying.
Should you buy stock in Bitcoin right now?
Before you buy stock in Bitcoin, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Bitcoin wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $371,519!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,281,302!*
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Neil Patel has positions in Invesco QQQ Trust. The Motley Fool has positions in and recommends Bitcoin and CME Group. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Bitcoin Just Hit a 30-Day High Above $65,000. Where Does BTC Go From Here?

Key Points
As of July 22, there's a nearly 35% chance that the Federal Open Market Committee (FOMC) will raise interest rates at its July 28-29 meeting.
Three catalysts appear to be fueling the growing possibility of a Fed rate hike.
Making borrowing costlier may prove devastating to a historically expensive stock market that's being driven by a partially debt-financed artificial intelligence data center build-out.
Throughout history, the Dow Jones Industrial Average (DJINDICES: ^DJI), S&P 500 (SNPINDEX: ^GSPC), and Nasdaq Composite (NASDAQINDEX: ^IXIC) have demonstrated a knack for climbing the proverbial wall of worry. Thus far, geopolitical concerns stemming from the Iran war haven't stopped Wall Street's major stock indexes from reaching new highs.
However, inflation isn't a concern that's easily swept under the rug -- just ask the policymakers at the Federal Reserve.
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The probability of a July FOMC rate hike has soared over the last week
In five days, on July 29, the 12-member Federal Open Market Committee (FOMC), including Fed Chair Kevin Warsh, will render its verdict on whether to raise or stand pat on interest rates. This decision can send shockwaves through the equity and bond markets.
On July 15, the CME Group's proprietary FedWatch Tool, which tracks 30-day Fed funds futures prices to gauge the probability of changes to the federal funds target rate at upcoming meetings, predicted a 10.7% chance of an FOMC rate hike on July 29. By July 22, the probability of the FOMC raising interest rates had more than tripled to 34.7%.
There are likely three catalysts behind this projected surge in rate-hike probability.
Rate-hike odds priced by the market for the upcoming July meeting next Wednesday have increased up to 31.5% from just 10.7% a week ago. pic.twitter.com/8rZb62cgQ8
-- Bespoke (@bespokeinvest) July 22, 2026
Firstly, peace talks between the U.S. and Iran have deteriorated throughout the month, leading to military escalation. For its part, Iran has announced yet another closure of the Strait of Hormuz. This international waterway sees a fifth of the world's liquid petroleum pass through it daily.
Choking off 20 million barrels per day of petroleum supply has sent crude oil prices significantly higher over the last week. In other words, the short reprieve consumers enjoyed at the fuel pump in recent weeks may quickly disappear.
Secondly, Trumpflation (i.e., inflation specifically driven by President Donald Trump's policies) has entered its next phase. The price stickiness of Core Personal Consumption Expenditures (PCE) indicates that the inflationary effects of the Iran war extend well beyond the energy sector.
Historically, energy supply shocks are relatively short-lived. In comparison, broad-based inflation, as indicated by Core PCE, is considerably more challenging for FOMC policymakers to combat without raising interest rates.
BREAKING: US May PCE inflation, the Fed's preferred inflation metric, rises to 4.1%, the highest reading since April 2023.
Core PCE inflation rose to 3.4%, its highest since October 2023.
US inflation is now officially running at more than double the Fed's 2% target.
-- The Kobeissi Letter (@KobeissiLetter) June 25, 2026
And thirdly, the inflationary effects of the artificial intelligence (AI) data center build-out continue to ramp up. While investors in graphics processing unit makers and memory/storage solutions suppliers are smiling from ear to ear, persistent AI hardware supply shortages, coupled with otherworldly pricing power for these businesses, are pushing up prices for consumers.
Fed Chair Warsh and the FOMC have ample justification to raise interest rates next week. But if they do, it could rightly spell the end to the stock market's AI-driven rally. Debt financing is playing a meaningful role in the AI data center build-out. If borrowing costs climb, even a minor slowdown in this expansion could leave the second-priciest stock market in history vulnerable to significant downside.
Should you buy stock in S&P 500 Index right now?
Before you buy stock in S&P 500 Index, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and S&P 500 Index wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $369,577!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,301,557!*
Now, it’s worth noting Stock Advisor’s total average return is 908% — a market-crushing outperformance compared to 208% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of July 24, 2026.
Sean Williams has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CME Group. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

CME Group Inc.

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