--- title: "The Fed Held Rates at 3.5%-3.75%. Here's What That Means for Walmart, Costco, and Target." type: "News" locale: "en" url: "https://longbridge.com/en/news/294274149.md" description: "The Fed held rates at 3.5%-3.75%, initially boosting stocks before yields spiked and indices fell. While a rate hike poses challenges for retailers, the current hold benefits Walmart, Costco, and Target. Target is most exposed due to discretionary sales; Walmart faces pressure on price-sensitive consumers; Costco remains resilient via its membership model. Ultimately, inflation levels, rather than interest rates, are the primary driver of consumer spending and stock performance for these companies." datetime: "2026-07-29T23:27:05.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/294274149.md) - [en](https://longbridge.com/en/news/294274149.md) - [zh-HK](https://longbridge.com/zh-HK/news/294274149.md) --- # The Fed Held Rates at 3.5%-3.75%. Here's What That Means for Walmart, Costco, and Target. The Fed chose to hold benchmark interest rates steady on Wednesday at 3.5%-3.75%. The stock market initially cheered the decision as the **S&P 500** popped when it was announced, and climbed through the first half of Fed Chair Kevin Warsh’s comments. However, it then shifted around 3:00 p.m. as 30-year treasury yields spiked, a sign that investors seemed unsatisfied with Warsh’s plans to fight inflation. Investors still see a greater than 50% chance that the Fed will hike rates by 25 basis points in September, according to the CME FedWatch tool, and Warsh reiterated his commitment to price stability and bringing inflation down to its target of 2%. Investors were certainly disappointed to see indexes plunge at the end of Wednesday’s session, with the **S&P 500** losing 1.5% and other major indexes down even further. Still, no change in rates may be the best thing for major retailers like **Walmart** (WMT +0.99%), **Costco Wholesale** (COST +0.77%), and **Target** (TGT +1.18%). Let’s take a closer look. ![Marble facade of the Federal Reserve building with engraved lettering above columned entrance](https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2Nkbi5jb250ZW50LmZvb2xjZG4uY29tL2ltYWdlcy8xdW1uOXFlaC9wcm9kdWN0aW9uLzJmN2U5ODYyMmViYzUwYWRlZGY2Nzc2M2E2ODU3Yjk2NDBlMmQ1MGMtMTIwMHg4MDAuanBnP3c9MTIwMCZoPTgwMCZxPTc1JmF1dG89Zm9ybWF0Jnc9Mzg0MA?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg) Image source: Getty Images. ## Walmart, Costco, Target, and the Fed The Fed’s rate decisions affect a wide range of businesses and industries, but no other companies have their fingers on the pulse of the American consumer like Walmart, Costco, and Target. These companies are sensitive to the Fed’s actions in a number of ways. First, the Fed funds rate directly influences credit card rates, which are based on the prime rate, which is determined by the Fed funds rate. As credit card APRs move higher, consumers may be more reluctant to spend money. Similarly, higher interest rates also act as a brake on the broader economy, disincentivizing borrowing by both businesses and consumers. For investors, that partly explains why stocks tend to fall as rates go up. Higher rates then, if they come, are likely to be a challenge for these retailers, though a 25-basis-point hike may not be meaningful. The three companies have different degrees of exposure to interest rates. Target is the most exposed. The company sells primarily discretionary goods and only has stores in the U.S., meaning it lacks the international exposure of Walmart or Costco. Discretionary products are also more sensitive to interest rates, inflation, and the macroeconomy, and consumers are more likely to cut back on spending on products like clothing, home goods, and electronics than on staples like food. Expand ![Target Stock Quote](https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vYXJ0L2NvbXBhbnlsb2dvcy9tYXJrL1RHVC5wbmcmdz0xMjg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg) ## NYSE: TGT Target Today's Change (1.18%) $1.70 Current Price $145.90 ### Key Data Points Market Cap $65BMarket cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary. Day's Range $142.17 - $147.77 52wk Range $83.44 - $147.77 Volume 3.2M Avg Vol 4.9M Gross Margin 25.65% Dividend Yield 3.16% Walmart has the next-most exposure, as it generates most of its revenue from staples like groceries but has historically catered to price-sensitive customers, meaning economic pressure could impact its discretionary categories. Expand ![Walmart Stock Quote](https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vYXJ0L2NvbXBhbnlsb2dvcy9tYXJrL1dNVC5wbmcmdz0xMjg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg) ## NASDAQ: WMT Walmart Today's Change (0.99%) $1.12 Current Price $114.22 ### Key Data Points Market Cap $900BMarket cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary. Day's Range $112.45 - $114.69 52wk Range $95.42 - $135.16 Volume 23.5M Avg Vol 22.5M Gross Margin 24.98% Dividend Yield 0.85% Finally, Costco seems to be the most resilient to outside factors like interest rates due to its membership model, which helps incentivize customer loyalty and accounts for most of its profits as it sells its goods near cost to attract members. Expand ![Costco Wholesale Stock Quote](https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vYXJ0L2NvbXBhbnlsb2dvcy9tYXJrL0NPU1QucG5nJnc9MTI4?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg) ## NASDAQ: COST Costco Wholesale Today's Change (0.77%) $7.45 Current Price $974.03 ### Key Data Points Market Cap $429BMarket cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary. Day's Range $963.00 - $978.80 52wk Range $844.06 - $1096.50 Volume 2M Avg Vol 2.4M Gross Margin 12.88% Dividend Yield 0.71% Notably, all three of these stocks rose on Wednesday, a sign that investors aren’t worried about the risk of modestly higher interest rates. ## One other metric to watch Investors in these companies are better off focusing on inflation rather than interest rates. Consumers are more sensitive to inflation, and that has a much more direct effect on consumer spending than interest rates. If inflation rises, that’s likely to both take a bite out of spending at Walmart, Costco, and Target, and encourage the Fed to raise rates, which would also pressure these stocks. Over the long run, the best thing for these retailers is for both inflation and interest rates to fall while the broader economy remains stable. ### Related Stocks - [TGT.US](https://longbridge.com/en/quote/TGT.US.md) - [WMT.US](https://longbridge.com/en/quote/WMT.US.md) - [COST.US](https://longbridge.com/en/quote/COST.US.md) - [COTG.US](https://longbridge.com/en/quote/COTG.US.md) - [COSW.US](https://longbridge.com/en/quote/COSW.US.md) - [.SPX.US](https://longbridge.com/en/quote/.SPX.US.md) ## Related News & Research - [Walmart Stock Falls 2.4% as AI Study Raises Regulatory Questions](https://longbridge.com/en/news/294406552.md) - [SRB Corp Cuts Position in Walmart Inc. $WMT](https://longbridge.com/en/news/293820102.md) - [Odds of a 25bp hike in interest rates at over 50% on Kalshi](https://longbridge.com/en/news/294251016.md) - [8,287 Shares in Target Corporation $TGT Acquired by Everest Financial Group LLC](https://longbridge.com/en/news/293839998.md) - [3 Consumer Staples Stocks For Defensive Dividend Investors](https://longbridge.com/en/news/294200008.md)