New York, Jan 14, 2026, 10:20 EST — Regular session
- Bank of America shares fall despite quarterly profit beating estimates
- With big banks reporting earnings, traders zero in on net interest income forecasts and credit trends
- Talk of a credit-card rate cap and the Fed’s meeting later this month remain key points to watch
Shares of Bank of America (BAC) dropped roughly 4.3% to $52.22 in early trading Wednesday, even though the bank posted quarterly profits that beat expectations. The decline adds to a broader selloff among major U.S. banks.
The broader market slipped, with the S&P 500 down 0.43% and the Nasdaq falling 0.68% by 9:34 a.m. ET, as investors digested mixed earnings from banks alongside new policy developments. After a solid 12-month rally, bank stocks were once again under pressure in early trading.
The focus has shifted from whether they beat estimates to what comes next for interest income. Bank of America projects net interest income — the difference between earnings on loans and costs on deposits — will climb 7% this quarter. It also stuck to its 2026 outlook, expecting growth between 5% and 7%. Analysts, meanwhile, had been targeting 96 cents a share in fourth-quarter earnings. “It’s not unusual to see a little bit of a pullback,” said Jake Johnston, deputy chief investment officer at Advisors Asset Management. Reuters
A regulatory filing revealed Bank of America’s fourth-quarter net income at $7.6 billion, translating to $0.98 per diluted share, while full-year profit reached $30.5 billion.
The bank reported a 7% rise in revenue net of interest expense to $28.4 billion, with net interest income up 10% at $15.8 billion. Sales and trading revenue grew 10%, hitting $4.5 billion. It set aside $1.3 billion for credit losses, the reserve for bad loans, and returned $8.4 billion to shareholders, including $6.3 billion in buybacks. CEO Brian Moynihan expressed optimism, calling himself “bullish on the U.S. economy in 2026.” The quarter also reflects an accounting adjustment for certain tax-related equity investments, which restated prior periods. SEC
Net interest income drives bank stocks whenever rates move. Falling rates may eventually reduce deposit expenses, but they also pinch earnings on new loans. The timing is unpredictable, and investors quickly grow restless.
Trading boosted results this quarter, but investors remain uncertain if that’s just a one-time lift from volatility or a trend that will last into 2026. They’re also watching loan growth closely and gauging if credit costs will remain low as the economy slows slightly.
Policy risks are clouding the group’s outlook. Banks and industry insiders caution that the proposed one-year cap on credit-card interest rates could turn credit cards into a money-loser, prompting lenders to pull back. Morningstar analyst Michael Miller weighed in, saying: “We think a cap is unlikely to be implemented, but if enacted it would have dire consequences for credit card profitability.” Reuters
Investors are eyeing upcoming bank earnings and any clues from the Federal Reserve on how quickly it might ease policy. The Fed’s next meeting is set for Jan. 27-28.
