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Investing.com -- Bank stocks surged higher Tuesday with a number of big names hitting 52-week highs on expectations that raised dividends and buybacks announcements will be forthcoming following the Fed’s latest bank stress test results.
Bank of America Corp (NYSE:BAC), Wells Fargo & Company (NYSE:WFC), and Citigroup Inc (NYSE:C) each hit 52-week highs today, and JPMorgan Chase & Co (NYSE:JPM) is just below its highs. The megacap banks, which hit new highs, closed up between 1.4% and 1.8%.
On Friday, the Federal Reserve Board’s annual bank stress test showed that large banks are well-positioned to weather a severe recession, while staying above minimum capital requirements and continuing to lend to households and businesses.
“The stress test is a clear demarcation that regulation is becoming less onerous,” Wells Fargo bank analyst Mike May wrote in a note to clients earlier this week.
He highlighted Goldman Sachs as the “big test winner,” along with Morgan Stanley (NYSE:MS), JPMorgan, Bank of America, US Bancorp (NYSE:USB), and Citigroup.
Keefe, Bruyette and Woods analyst said the stress test results were "remarkably strong". The firm highlighted that the Fed assumed meaningfully higher PPNR results for the group as well as a meaningful reduction in counterparty trading losses.
JP Morgan, Wells Fargo, and Citigroup kick off the third quarter earnings season on July 15th.