NEW YORK, December 31, 2025, 15:02 ET — Regular session
- Bank of America shares were slightly lower in afternoon trading, broadly tracking the bank sector.
- A record draw on the Fed’s standing repo facility highlighted year-end balance-sheet tightening in funding markets.
- Investors are looking ahead to January jobs data, the Fed’s next policy meeting and Bank of America’s earnings.
Bank of America Corporation shares were down about 0.3% in afternoon trading on Wednesday as year-end funding-market flows and rate expectations set the tone for U.S. financial stocks.
The move matters now because big banks are sensitive to shifts in short-term funding costs, which can filter into trading conditions and overall financing appetite heading into 2026. At year-end, liquidity often tightens as institutions trim balance sheets.
It also comes ahead of a January stretch of catalysts that can reset expectations for Federal Reserve policy and the rate backdrop banks face. Those expectations are closely tied to net interest margin — the spread between what a bank earns on loans and what it pays depositors.
Wall Street’s major indexes were slightly lower in thin holiday trading, with markets closed on Thursday for New Year’s Day, Reuters reported.
Bank stocks were mixed. The Invesco KBW Bank ETF slipped about 0.3% and the Financial Select Sector SPDR Fund was down roughly 0.3%; JPMorgan was up slightly, while Citigroup and Wells Fargo were lower.
In money markets, eligible firms borrowed a record $74.6 billion from the New York Fed’s standing repo facility on the final trading day of 2025, Reuters reported, as institutions managed liquidity needs into year-end. The same report said $106 billion flowed into the Fed’s reverse repo facility, a sign some lenders preferred to park cash at the central bank.
Repo rates have firmed in recent days, with the secured overnight financing rate (SOFR) — a benchmark for overnight borrowing backed by Treasuries — reaching 3.77% on Monday before easing to 3.71% on Tuesday, Reuters reported. “A month ago, people were a lot more worried year-end would be substantially more stressful,” Jan Nevruzi, a U.S. rates strategist at TD Securities, said. Reuters
Repos are short-term loans backed by high-quality collateral, widely used by banks and trading firms to fund positions and meet day-to-day cash needs. The Fed’s standing repo facility is designed to act as a backstop, letting eligible firms swap collateral for cash when private funding becomes scarce.
On the data front, U.S. initial jobless claims fell to 199,000 for the week ended Dec. 27, below economists’ expectations, Reuters reported. The Labor Department is scheduled to publish December employment figures on Jan. 9, a report investors typically treat as a key input into the Fed outlook.
The policy backdrop remains a balancing act for banks. Lower rates can compress lending spreads over time, while a steadier or higher rate path can support margins but raise questions about credit performance as borrowers refinance.
The Fed’s next policy meeting is scheduled for Jan. 27–28, according to the central bank’s calendar.
Bank of America is scheduled to report fourth-quarter 2025 results on Wednesday, Jan. 14, 2026, with results expected around 6:45 a.m. ET and an investor call at 8:30 a.m. ET, the company said previously.
Until those events, traders said the stock is likely to keep trading as a rate-sensitive bank proxy, with any renewed volatility in funding markets or a sharp move in yields quickly echoing through the big-bank group.
