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How to trade Fed's interest rate hike

After the Federal Reserve hiked interest rates Wednesday for the first time since 2006, "Fast Money" traders picked apart the best ways to trade the move.

The central bank abandoned its near-zero interest rate policy, moving its short-term interest rate target 0.25 percent higher. The Fed also signaled its intention to normalize gradually.

Markets responded positively, with the S&P 500 rising about 1.5 percent to 2,073.07. Trader Dan Nathan contended that the index could "run out of steam" by the end of the week if it approaches 2,100.

Traders work on the floor of the New York Stock Exchange.
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Traders work on the floor of the New York Stock Exchange.

Some financial stocks climbed in the wake of the decision, and trader Pete Najarian sees some "strength" in the Financial Select Sector SPDR Fund. It closed 1.6 percent higher Wednesday.

He noted, though, that financials could run into trouble if the yield curve flattens next year.

Others saw plays on the U.S. dollar. The greenback moved slightly higher in choppy trade after the decision Monday.

Nathan believes the dollar will climb from here, boosting the PowerShares DB US Dollar Index Bullish Fund. But trader Tim Seymour contended the greenback would sag in the coming months.

Gold could stay steady or rise in the wake of the decision, giving a boost to the Market Vectors Gold Miners ETF for "the next few weeks," trader Guy Adami contended. The fund rose about 4 percent Wednesday.

Disclosures:

Tim Seymour

Tim Seymour is long AAPL, BAC, BX, CLF, DIS, F, FCX, GE, GM, GOOGL, INTC, JCP, JPM, KO, LGF, RL, T, TWTR, VRX. Tim's firm is long BABA, BIDU, MCD, NKE, SBUX, YHOO.

Pete Najarian

Long AAPL, AMAT, BAC, BMY, BP, CSX, DIS, DISCA, DKS, FOXA, GE, KKR, KO, MRK, PEP, PFE, PHM he is long calls A, ABX, BAC, BEE, CNX, DAL, DOW, EMR, GDX, GLW, HAIN, HLT, LC, LULU, MOS, MRK, MSFT, PBR, POT, SPY, TA, TSN, UA, UAL, VZ, XLF, XLK, WYNN, ZIOP He is long puts FCX, MRO, WFT, X

Dan Nathan

Long PFE buy-write, Long TWTR March Risk Reversal, long IWM Dec Put Spread, Long UUP call spread, Long XLU Feb Call, Long PYPL Jan Risk Reversal, Long M Jan16 52.50 / 62.50 call spread, Long INTC Dec Put Spread, Long XLF Dec put spread, Long NTAP risk reversal, Long GM Jan Put Butterfly

Guy Adami

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