2 Headwinds You Must Understand Before Investing in a Bank

By Jay Jenkins – Jun 26, 2013 at 8:07PM

NYSE: JPM

JPMorgan Chase

Market Cap

$556B

Today's Change

(-0.15%) -$0.29

Current Price

$192.79

Price as of April 25, 2024, 10:57 a.m. ET

The bond market is signaling a rapid rise in interest rates is just around the corner -- these two issues are the most critical challenges facing banks today.

The recent and very rapid rise in bond yields is changing the playing field for banks. As second-quarter earnings announcements rapidly approach, expect them to have an impact on both revenue and profit margins.

Every bank will be affected, from the trillion-dollar megabanks like JPMorgan Chase (JPM -0.15%) and Wells Fargo (WFC -0.46%), to the community bank headquartered in your home town (or an index of community banks, like the SPDR S&P Regional Banking Index).

In the video below, Motley Fool contributor Jay Jenkins explains these critical issues and what they mean heading into the second-quarter earnings season.

Fool contributor Jay Jenkins has no position in any stocks mentioned. The Motley Fool recommends Wells Fargo. The Motley Fool owns shares of JPMorgan Chase and Wells Fargo. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.