WFC - Low Interest Rates Can Help These Commercial Banks Rally Higher | Benzinga
Every cycle brings new opportunities; now that the Federal Reserve (the Fed) is looking to cut interest rates in 2024, the market could be getting ready to shift in a new direction. Banking stocks could be the first to move, as they are tied to the financial pulse of the economy.
Not all bank stocks are made equal, though. There are investment banks and commercial banks. In this new interest cycle, the market is hinting at the branch of banks that it expects to outperform the rest of the financial sector. Backed by fundamentals, investors could take a closer look at the coming wave.
Initially, hybrid (investment and commercial) banks like J.P. Morgan Chase & Co. (NYSE: JPM) and Northern Trust Co. (NASDAQ: NTRS) are the type of institutions that the market is looking to buy, no matter the price. Overpaying for future potential returns is a trend in these stocks that starts here.
Why Banks for Lower Rates?
Traders bet that the Fed will cut interest rates by May or June 2024, a trend investors can follow through the FedWatch tool offered by the CME Group Inc. (NASDAQ: CME). Because markets move well before the trend becomes apparent, J.P. Morgan stock is now flirting with new all-time highs.
However, the train still has a long way to go, meaning investors ...