Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Why JPMorgan, Wells Fargo, Bank of America, and Other Bank Stocks Rose Today

By Joe Tenebruso - Jan 7, 2021 at 7:35PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A Biden bull market could be about to begin.

What happened

Bank stocks climbed on Thursday, following key Senate elections and Congress' confirmation of President-elect Joe Biden's victory. By the close of trading, shares of JPMorgan Chase ( JPM -1.81% ), Wells Fargo ( WFC -2.37% ), and Bank of America ( BAC -2.27% ) were up 3.3%, 2.3%, and 2.2%, respectively. 

So what

Biden's victory combined with effective control of both the Senate and House of Representatives will make it easier for the Democrats to pass sweeping stimulus programs. These measures could help to reinvigorate the economy, which would be a boon for banks.

A person is pointing to an upwardly sloping digital chart.

Shares of the major banks rose sharply on Thursday. Image source: Getty Images.

A stronger economy would likely lead to fewer loan losses for banks, as well as greater demand for loans and other financial services. Additionally, an economic recovery could also drive interest rates higher. Banks' net interest margins tend to improve as rates rise.

Now what

Analysts have been ramping up their price forecasts for the major bank stocks in recent days. Jefferies analyst Ken Usdin sees JPMorgan's revenue and earnings increasing steadily as it takes share from smaller competitors. Meanwhile, Barclays analyst Jason Goldberg estimates that Bank of America can grow its per-share profits by more than 50% over the next two years, due in part to lower loan losses and larger stock buybacks. 

Lastly, while Wells Fargo remains behind its peers in several key metrics, Usdin expects its cost-cutting initiatives to pay dividends as it progresses with its turnaround strategy. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Wells Fargo & Company Stock Quote
Wells Fargo & Company
$47.75 (-2.37%) $-1.16
Bank of America Corporation Stock Quote
Bank of America Corporation
$43.87 (-2.27%) $-1.02
JPMorgan Chase & Co. Stock Quote
JPMorgan Chase & Co.
$158.29 (-1.81%) $-2.92

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/04/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.