New York, June 21, 2026, 08:48 EDT
- The Financial Select Sector SPDR ticked up 0.4% last week, behind the S&P 500, which rose 0.9%. Regional banks dropped around 2.2%.
- The Federal Reserve kept rates steady at 3.50%-3.75%. Fresh projections from policymakers pointed to a possible hike before the end of the year.
- Bank stress-test results come out Wednesday, along with Jefferies earnings. May inflation and updated Q1 GDP are due Thursday.
Fed stress-test results to drive U.S. bank stocks in coming week
Results from the Federal Reserve’s annual stress test will likely steer U.S. financials this week after the group eked out a small advance in the holiday-shortened session. The Fed is set to release results for 32 major banks on Wednesday at 4 p.m. EDT.
The exercise won’t affect banks’ capital requirements this time. But for investors, it gives a new look at balance-sheet strength as the Fed shifts focus to inflation and the personal consumption expenditures price index, which lands Thursday.
Financial Select Sector SPDR climbed to $53.57 from $53.34 in four sessions. S&P 500 added around 0.9%. The KBW Nasdaq Regional Banking Index fell 2.2%. Markets shut Friday for Juneteenth.
Financial stocks started strong this week, but gains faded when the Fed held its key rate steady and hinted more rate hikes might come. “There was clearly a hawkish tilt,” said Michael James, managing director of equity trading at Rosenblatt Securities. Regional banks fell behind bigger banks after the Fed’s statement. Reuters
This isn’t just a higher-rates story. While banks can see some help for net interest margin when rates stay up—the difference between what they make on loans and securities and what they pay to depositors—higher rates also weigh on loan demand, squeeze bond holdings, and can add to credit losses. The Fed now projects median inflation at 3.6% for 2026 and core inflation at 3.3%.
Goldman Sachs finished the week up about 3.2%, while JPMorgan Chase climbed 1.4%. Bank of America ticked up just 0.3%. The moves show investors still leaning towards banks with big trading and advisory revenue rather than those that rely more on regular loan growth.
Capital-markets activity stood out this year. Goldman reported it had advised on over $1 trillion of announced M&A in the first half, calling it a record, and said it was still ahead of JPMorgan, which is second. “Active dialogues continuing across all sectors and transaction sizes,” said Matt McClure, Goldman’s global co-head of investment banking. Reuters
Consumer credit isn’t looking steady. JPMorgan’s consumer-banking head Marianne Lake said the bank is “very, very watchful,” pointing out that some household wages are lagging inflation and most of the extra cash from the pandemic has now evened out. Reuters
The Fed’s stress test this Wednesday models a sharp worldwide slump, unemployment hitting 10%, home prices down around 30%, and a 39% drop in commercial property values. Banks’ stress capital buffers will stay where they are through at least 2027, as the Fed updates how it tests banks. That holds off changes to payouts and buybacks for now, but stocks could still react if the tests point to much bigger losses than expected.
Jefferies is set to release its quarterly numbers after the bell Wednesday, giving an early look at trading and deal revenue. May new-home sales also land that day. On Thursday, investors will watch PCE inflation, durable-goods orders, and the latest Q1 GDP estimate.
The big worry is still a stronger inflation print driving Treasury yields up and boosting bets on a Fed hike. That might widen lending spreads for now, but if yields stay up, loan demand and household credit quality could get hit—April data showed real disposable income pinched. The sector also faces downside if a tough stress-test loss number or a poor Jefferies outlook lands.
