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Fast Money

Stocks to trade if Fed raises interest rates

Stocks to trade if the Fed raises rates

Financial stocks will likely enjoy a stronger run before a possible Federal Reserve rate hike than after it, said CNBC "Fast Money" trader Brian Kelly.

Investors may want to buy the sector ahead of the move but shed their stake when it happens, he contended. Kelly noted the S&P Regional Banking ETF holds upside ahead of a rate liftoff.

"All the action is going to take place before the FOMC meeting," he said.

CME Group sign at NYMEX in New York.
Adam Jeffery | CNBC

Market expectations that the Federal Open Market Committee will abandon years of near-zero interest rate policy at its September meeting have fallen amid a turbulent run for the U.S. stock market. But whether the U.S. central bank increases rates next month or chooses to wait, financials should climb ahead of the decision, Kelly said.

Read MoreFed's Fischer: Too early to decide on September

The CME Group could also benefit when the Fed hikes, trader Guy Adami said. He believes the Chicago Mercantile Exchange's options and futures will see a flurry of action, driving the stock higher.

Trader Steve Grasso pointed possible upside in discount stock brokerage ETRADE Financial after the move.


Steve Grasso

Steve is long AAPL, BA, BAC, CC, DD, DIS, DECK, EVGN, FIT, KBH, MJNA, MU, PFE, PHM, T, TWTR, GDX. His kids own EFA, EFG, EWJ, IJR, SPY.

Brian Kelly

Brian Kelly is long BBRY, TWTR call spread, Bitcoin, U.S. Dollar; he is short British Pound, Euro, Ruble, Yen, Yuan, US Treasuries. Today he shorted British Pound.

Guy Adami

Guy Adami is long CELG, EXAS, INTC, Guy Adami's wife, Linda Snow, works at Merck.