Rising rates hurt these stocks. They could benefit now if the Fed dials back inflation fight

Published Wed, Dec 14 202211:09 AM ESTUpdated Wed, Dec 14 20222:48 PM EST

The stock market has been under pressure from the Federal Reserve's interest rate hikes, but some names have been hit harder than others — and could be poised to rebound once the Fed slows down. The central bank hiked rates by another 50 basis points on Wednesday in its effort to combat inflation. Officials also indicated it expected to keep rates higher through next year, dashing hopes that there would be further reductions in the near term. Investors had hoped there would be signals that the Fed would scale back, especially since consumer prices rose less than expected in November. Once the Fed implies it will ease its inflation fight, and the 10-year Treasury yield keeps pulling back, stocks that were the hardest hit from rate increases could benefit. Bank of America recently screened for S & P 500 stocks with the lowest nominal interest rate betas, meaning they are hurt by rising nominal interest rates. The screen is based on a regression of the stocks' monthly excess returns versus the monthly changes in the 10-year Treasury yield from 1972 through November of this year. Here are 10 of those names, all rated a buy from Bank of America. Take-Two Interactive Software , which has a nominal interest rate beta of -7.6, has lost more than 40% this year. In November, the gaming company said its outlook in the current quarter and for fiscal 2023 would be lower than previously expected. It now expects fiscal 2023 net bookings to come in between $5.4 billion and $5.5 billion, versus its previous expectation of $5.77 billion at the midpoint. In addition to the buy rating from Bank of America, Cowen recently named Take-Two as a top 2023 pick based on the company's "long-term track record." Also on the list is Ventas , a real estate investment trust operating in the health care space. It has lost about 9% year to date and has a nominal interest rate beta of -6.3. REITs overall have been hit this year by rising interest rates, since investors who have them for their high dividend yields may ditch the assets for risk-free Treasurys. However, Morningstar senior equity analyst Kevin Brown recently told CNBC that Ventas could benefit from the aging population with its exposure to senior housing. Meanwhile, Chipotle Mexican Grill has a nominal interest rate beta of -5.8 and has lost more than 11% so far this year. The restaurant chain reported quarterly earnings in October that topped expectations , with CEO Brian Niccol saying there has been "minimal resistance" to higher menu prices. In the utility space, Duke Energy has a -2.8 beta and has lost about 2% this year, through Tuesday's close. In November, the energy company reported an earnings miss, with its third-quarter earnings-per-share coming in at $1.78 versus StreetAccount's estimate of $1.84. However, revenue came in at $7.97 billion, above the $7.39 billion expected. Lastly, Pfizer made the list, with a -2.8 beta. The stock is down about 10% year to date. In November, the pharma giant reported an earnings and revenue beat for the third quarter. In addition to Bank of America's buy rating, the stock was also upgraded recently by Goldman Sachs to buy from neutral. — CNBC's Michael Bloom contributed reporting.