After the first increase to the federal funds rate in three years following the September Fed meeting , you’re probably looking closely at your holdings, as well as across the market, for stocks to avoid as interest rates rise.
With inflation issues still persistent and a clear desire from the central bank to stabilize prices, the future likely includes higher rates. Naturally, that will disrupt both stock and bond markets.
If you’re focused on long-term growth, obviously you shouldn’t abandon the market altogether because of short-term volatility prompted by uncertainty about interest rates.
However, rising interest rates can cause big problems for certain businesses that depend on borrowing, need frequent refinancing or generate too little cash to cover their financial obligations.
As rates rise, these activities become more costly and eat into profitability. Although higher rates aren’t guaranteed, the 10-year Treasury yield has already hit its highest level in more than two decades.
That means investors have ample data to show that borrowing costs and Treasury yields are already having an impact, particularly on firms with weak share-price performance and uncertain paths to stronger profits.
The following companies face a combination of financial and business headwinds that could make them particularly vulnerable in the months ahead as interest rates rise.
Here are five stocks to avoid as interest rates rise.
Data is as of October 21.
Boeing
(Image credit: M. Scott Brauer/Bloomberg)
Market value: $151.9 billion
Sector: Industrials
Boeing ( BA ) has a long road ahead as it works to restore profitability and investor confidence following years of production problems, safety concerns and costly delays. That task will be even harder as rates rise.
The aerospace manufacturer faces elevated borrowing costs, along with its substantial debt burden limiting financial flexibility while it attempts to improve manufacturing efficiency.
In September, the firm’s CEO acknowledged that stabilizing production of the 737 MAX was taking longer than expected and delays in increasing production of its 787 Dreamliner also persist.
With some $26 billion in debt and operations currently in the red this fiscal year, strong demand for new aircraft alone can’t cause this industrial stock to take off.
Higher financing costs would make an increasingly delayed turnaround even more expensive, and shares have declined by double digits in 2026 in part because of these challenges.
The fact that its customers may also face borrowing headwinds for big-ticket Boeing planes makes the situation even less attractive.
Carnival
(Image credit: AaronP/Bauer-Griffin/GC Images)
Market value: $36.9 billion
Sector: Consumer discretionary
Carnival ( CCL ) faces a challenging combination of substantial debt, rising operating expenses and sensitivity to consumer spending.
This last point is particularly noteworthy, as Carnival typically is not catering to the highest tier of consumers. And many of its customers could see purchasing power eroded significantly by higher interest rates.
That one-two punch could make the cruise operator particularly vulnerable if interest rates remain elevated, as it faces operational headwinds even as its itineraries become less budget-friendly for travelers.
The company has roughly $25 billion in debt, and some $2.5 billion scheduled to mature in 2027 and another $4 billion is maturing in 2028, according to SEC filings . At the same time, operating expenses are on the rise in 2026 thanks to elevated fuel prices.
Small wonder shares of the consumer discretionary stock are down about 25% from their February highs before the U.S. bombed Iran. Although demand for cruises hasn’t crumbled yet, a combination of higher rates and higher costs make Carnival a risky bet.
Crown Castle
(Image credit: Mark Mulligan/Houston Chronicle)
Market value: $33.5 billion
Sector: Real estate
Crown Castle ( CCI ) is a real estate investment trust (REIT) that specializes in telecommunications infrastructure. Among specialty REITs , it’s certainly a stable business. But it’s also not exactly growing at breakneck speed given market saturation.
What’s more, maintaining and growing a network of cell phone towers for lease to wireless service providers takes significant capital, and CCI’s debt load and recent business transition make it vulnerable if interest rates continue to rise.
The company has been restructuring its operations and selling its fiber businesses to focus more heavily on wireless towers. Proceeds from the asset sale seem a good thing, as they’re intended to help reduce the firm’s massive debt load of about $30 billion.
But the move also leaves Crown Castle more dependent on tower leasing from wireless carriers that face their own spending crunch amid rising telecom borrowing costs.
In fact, the company has forecast a decline in 2026 site rental revenue that reflects these challenges. And with a leadership transition at the company that includes the third CFO since 2025, the company’s ongoing changes bring these financing challenges into greater focus.
Lucid Group
(Image credit: Samuel Corum/Bloomberg )
Market value: $1.3 billion
Sector: Consumer discretionary
Lucid Group ( LCID ) has long been a high-risk investment as the luxury electric vehicle maker has looked to build out its global footprint and become a leader in the emerging EV category.
However, Lucid has struggled to match its production with demand. Lack of profitability, rising rates and a risk of consumer borrowing headwinds create even bigger problems going forward.
The company’s latest delivery figures of 3,806 vehicles for the third quarter show just how small LCID stock is compared with other automakers.
Even if you look past the intense competition in the market to gain share, high manufacturing costs and the challenge of reaching true scale are daunting.
The company has cut jobs as part of its cost-reduction efforts and a hope to reduce cash burn, but there’s little room for execution problems or slower build-out if this stock is going to live up to the growth promises of the past year or two.
And while higher financing costs are a practical concern, equally troubling is a gut-wrenching drop of about 80% in the last 12 months as investors have given up on this one-time momentum darling.
A combination of financial woes and Wall Street pessimism creates an awfully tough hill to climb for this EV company.
Vornado Realty Trust
(Image credit: Bill Tompkins/Getty Images)
Market value: $6.1 billion
Sector: Real estate
Another real estate leader, Vornado Realty Trust ( VNO ) is exposed to two challenges that can be particularly damaging when interest rates are high: a tough office property market and the cost of financing a massive commercial real estate portfolio.
The New York-focused landlord has been working to improve occupancy in the last year or so, but big-ticket office properties continue to face pressure from changing staffing patterns in the age of remote work.
Shares remain about half of where they were right before the pandemic of 2020, and the fact that rates are now at multi-decade highs put even more pressure on this struggling real estate leader.
Its debt obligations provide a more immediate reason for caution.
Recently, mortgages have been sent to “special servicing” as a sign of potential default. Although Vornado secured forbearance agreements to soften the blow for several months, interest and payments continue to accrue.
That delay could allow for asset sales to fund refinancing, but the current high interest rate environment makes the timing of those deals very painful.
Investors should closely watch VNO as a prime example of the kind of stocks to avoid as interest rates rise.
With limited balance sheet flexibility and a steady increase in borrowing costs, it’s no wonder shares of this REIT are down about 14% in the last 12 months.
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