This website collects cookies to deliver better user experience. Cookie Policy
Accept
Sign In
The Wall Street Publication
  • Home
  • Trending
  • U.S
  • World
  • Politics
  • Business
    • Business
    • Economy
    • Real Estate
    • Markets
    • Personal Finance
  • Tech
  • Lifestyle
    • Lifestyle
    • Style
    • Arts
  • Health
  • Sports
  • Entertainment
Reading: Bank Stocks Could Be Big Winners Ahead of Potential Fed Rate Rises
Share
The Wall Street PublicationThe Wall Street Publication
Font ResizerAa
Search
  • Home
  • Trending
  • U.S
  • World
  • Politics
  • Business
    • Business
    • Economy
    • Real Estate
    • Markets
    • Personal Finance
  • Tech
  • Lifestyle
    • Lifestyle
    • Style
    • Arts
  • Health
  • Sports
  • Entertainment
Have an existing account? Sign In
Follow US
© 2024 The Wall Street Publication. All Rights Reserved.
The Wall Street Publication > Blog > Markets > Bank Stocks Could Be Big Winners Ahead of Potential Fed Rate Rises
Markets

Bank Stocks Could Be Big Winners Ahead of Potential Fed Rate Rises

Editorial Board Published January 11, 2022
Share
Bank Stocks Could Be Big Winners Ahead of Potential Fed Rate Rises
SHARE

Bank investors are ready for higher Treasury yields.

Contents
SHARE YOUR THOUGHTSNewsletter Sign-upMarkets

The S&P 500 financials sector edged up 5.4% last week, the first five trading days of January. That marked its best start to a calendar year since 2010. The gain contrasts with the 1.9% pullback in the broader S&P 500 index.

Investors are betting that looming interest-rate increases will fuel profits in financials and make the sector more attractive than tech, one of the main contributors to last year’s rally.

The KBW Nasdaq Bank Index rose 10% last week, the largest percentage gain since November 2020. The tech-heavy Nasdaq Composite fell 4.5% last week, the most since March 2020.

The S&P 500 financial sector gained 0.8% Tuesday.

Last week’s surge came after the Federal Reserve signaled midweek that officials might raise rates as soon as March, faster than previously anticipated. On Tuesday, the yield on the 10-year Treasury note settled at 1.745%, up from 1.666% a week ago.

SHARE YOUR THOUGHTS

What is your outlook for bank stocks in 2022? Join the conversation below.

Banks have still managed to notch recent blockbuster profits, thanks to big gains in trading and deal making. But higher interest rates would help with their bread-and-butter business.

Banks make money in part by charging higher rates on their loans compared with what they pay out on their deposits, and they tend to raise interest rates on loans before increasing them on deposits.

Rates on some types of loans, like mortgages, tend to move in tandem with the 10-year Treasury yield.

Banks also tend to raise rates on some corporate and commercial real-estate loans when longer-term yields rise.

Those yields can be a proxy for market expectations for Fed rate increases. When the central bank raises its benchmark rate, banks tend to increase their rates on credit cards and some variable-rate loans.

“The spread between what you charge on loans relative to what you pay on deposits will begin to widen as rates rise,” said Jason Goldberg, a banking analyst at Barclays, who is recommending investors position themselves in banks in 2022.

Some banks are already benefiting. Regions Financial Corp. , M&T Bank Corp. and Citizens Financial Group Inc. all rose about 15% last week. On Tuesday, M&T and Citizens gained but Regions fell.


Newsletter Sign-up

Markets

A pre-markets primer packed with news, trends and ideas. Plus, up-to-the-minute market data.


“The backdrop for financial stocks is very favorable: Rising interest rates can boost bank margins, and a strong economy can lead to increased borrowing,” said Greg McBride, chief financial analyst at Bankrate.com.

For now, investors are looking forward to earnings later in the week for more clues about corporate profits.

JPMorgan Chase & Co., Citigroup Inc. and Wells Fargo & Co., some of the largest banks in the U.S., report fourth-quarter results Friday.

Many Mostcentral-bank officials have penciled in at least three quarter-percentage-point rate increases this year, though some bankers are hoping for more.

“I’d personally be surprised if it’s just four increases,” JPMorgan Chief Executive Jamie Dimon said Monday on CNBC. “It’s a very, very little amount and very easy for the economy to absorb.”

The Federal Reserve says it will accelerate the wind-down of its bond-buying program, the biggest step the central bank has taken in reversing its pandemic-era stimulus. Here’s how tapering works, and why it sends markets on edge. Photo illustration: Adele Morgan/WSJ

—David Benoit contributed to this article.

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

TAGGED:MarketsPAIDWall Street Publication
Share This Article
Twitter Email Copy Link Print
Previous Article Citigroup to Exit Mexico Consumer Banking Business Citigroup to Exit Mexico Consumer Banking Business
Next Article U.S. Stocks Finish Higher as Tech Shares Climb U.S. Stocks Finish Higher as Tech Shares Climb

Editor's Pick

Alyssa Farah Griffin: ‘The View’ Co-Host is Pregnant With Child #1!

Alyssa Farah Griffin: ‘The View’ Co-Host is Pregnant With Child #1!

Studying Time: 3 minutes The View co-host Alyssa Farah Griffin is pregnant! On ‘The View,’ Alyssa Farah Griffin breaks the…

By Editorial Board 3 Min Read
Arturo Gatti Jr. Reason behind Dying: Son of Boxing Legend Passes Away at 17
Arturo Gatti Jr. Reason behind Dying: Son of Boxing Legend Passes Away at 17

Studying Time: 2 minutes Aruturo Gatti Jr. — an aspiring boxer and…

3 Min Read
Mandy Moore ‘Unrecognizable’ to Followers After Debuting New Face
Mandy Moore ‘Unrecognizable’ to Followers After Debuting New Face

Studying Time: 4 minutes Mandy Moore has followers scratching their heads. This…

6 Min Read

Oponion

Man wounded in Oakland drive-by taking pictures

Man wounded in Oakland drive-by taking pictures

OAKLAND — A 30-year-old man was wounded in a drive-by…

December 11, 2024

The 5 Love Languages, Defined—Which One Are You?

My husband doesn’t actually care after…

April 3, 2025

McDonald’s to slash combo meal costs to win again budget-conscious buyers

California McDonald’s franchisee Scott Rodrick joins…

August 20, 2025

Tour bus rolls over on western New York freeway, killing 5 individuals, police say

5 persons are lifeless after a…

August 23, 2025

The IoT developments shaping a better, extra linked future in Africa

By BCX. The Web of Issues…

January 31, 2025

You Might Also Like

ETF chief board dominated by nimble funds
Markets

ETF chief board dominated by nimble funds

VistaShares CEO Adam Patti breaks down ETFs that mimic the commerce methods of Invoice Ackman and Warren Buffett on 'The…

4 Min Read
JPMorgan Chase launches .5 trillion plan to bolster US financial and nationwide safety
Markets

JPMorgan Chase launches $1.5 trillion plan to bolster US financial and nationwide safety

JPMorgan Chase Chairman and CEO Jamie Dimon talks federal spending, the state of markets, billion-dollar tech investments, commerce tensions, nationwide…

4 Min Read
Crypto massacre wipes out billions, however indicators of stabilization emerge
Markets

Crypto massacre wipes out billions, however indicators of stabilization emerge

Terry Duffy, CME Group chairman and CEO, weighs in because the cryptocurrency buying and selling platform Coinbase misplaced half its…

4 Min Read
Crypto dealer discovered useless in Lamborghini in Kyiv as market plunges
Markets

Crypto dealer discovered useless in Lamborghini in Kyiv as market plunges

Nexo co-founder and managing companion Antoni Trenchev discusses the cryptocurrency business on ‘Making Money with Charles Payne.’ This story discusses…

3 Min Read
The Wall Street Publication

About Us

The Wall Street Publication, a distinguished part of the Enspirers News Group, stands as a beacon of excellence in journalism. Committed to delivering unfiltered global news, we pride ourselves on our trusted coverage of Politics, Business, Technology, and more.

Company

  • About Us
  • Newsroom Policies & Standards
  • Diversity & Inclusion
  • Careers
  • Media & Community Relations
  • WP Creative Group
  • Accessibility Statement

Contact

  • Contact Us
  • Contact Customer Care
  • Advertise
  • Licensing & Syndication
  • Request a Correction
  • Contact the Newsroom
  • Send a News Tip
  • Report a Vulnerability

Term of Use

  • Digital Products Terms of Sale
  • Terms of Service
  • Privacy Policy
  • Cookie Settings
  • Submissions & Discussion Policy
  • RSS Terms of Service
  • Ad Choices

© 2024 The Wall Street Publication. All Rights Reserved.

Welcome Back!

Sign in to your account

Lost your password?