Bank stocks rise on Fed rate-cut rally

Published On Sep 19, 2024, 11:20 AM

Bank stocks surged following a significant rate cut from the Federal Reserve, leading to optimism among investors. Major banks like Goldman Sachs, Capital One, and Citigroup saw substantial increases in their stock prices. Analysts suggest that while the initial effects of lower rates could negatively impact net interest income, primarily due to slower adjustments in deposit costs compared to loan yields, the long-term outlook remains positive if the lower rates stimulate economic growth and improve asset quality. Particularly, regional banks with higher exposure to commercial real estate are expected to benefit as demand from commercial borrowers increases with lower rates, potentially leading to a market revaluation of banking stocks.

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Stock Forecasts

GSView GS chart on TradingView

Positive

Given the bullish trend following the Fed's rate cuts and the positive sentiment around bank stocks, we can expect Goldman Sachs to continue performing well. Though there are concerns about net interest income initially, the overall market optimism and historical patterns suggest a strong recovery for goldman and other major banks.

JPMView JPM chart on TradingView

Positive

As market conditions stabilize and improve post-rate cuts, JPMorgan Chase, despite initial concerns, is positioned for long-term growth due to its significant asset base and should attract investors with its recovery potential.

BACView BAC chart on TradingView

Positive

Bank of America is expected to benefit from rate cuts as they could lead to improved lending appetite in the market, which aligns with the predicted positive trend for regional and larger banks alike.

KREView KRE chart on TradingView

Positive

The regional banks in particular, such as those tracked by KRE, are set to see a notable positive impact as they begin to benefit from increased borrower demand in light of reduced uncertainty and borrowing costs.

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