Why Bank Of America (BAC), Citigroup (C), JPMorgan Chase & Co. (JPM) Stocks Gained Yesterday

The recently released May jobs report has raised the possibility that the Federal Reserve’s much-discussed rate hike will take place in September. The data indicates a second-quarter rebound with a stronger-than-expected growth for the month of May. Against the expectations of 225,000 jobs, 280,000 jobs were created in the month.

However, the data revealed that unemployment rates have risen from 5.4% in April to 5.5% in May. The strong, non-farm payroll report may put the rate hike on the table, as most analysts believe interest rates will increase in September.

As per Barron’s, analyst Peter Boockvar at The Lindsey Group states: “Combining a still good growth rate of over 200k per month with the uptick in average hourly earnings is making the Fed’s zero rate policy looking more and more inappropriate to say the least and the US Treasury market is not waiting around for the Fed to act.”

As of late, analysts have been discussing the rise in rates and the sensitivity to big banks’ earnings. Bank of America Corp (NYSE:BAC), Goldman Sachs Group Inc (NYSE:GS), Citigroup Inc (NYSE:C), and JPMorgan Chase & Co.(NYSE:JPM) are the key focus. It is believed they are set to benefit the most from the rise, as they are deemed to earn more on every penny they lend. A recent research report by Bernstein revealed that Bank of America is better positioned than other banks to earn in case of an increase in the interest rates.

Bank of America stock gained 2.41% in yesterday’s trading, while Citigroup and JP Morgan Chase stocks rose 1.63% apiece, as the market closed. In regional banks, Regions Financial Corp (NYSE:RF) stock gained 2.93% and KeyCorp (NYSE:KEY) stock closed up 2.37% by day end. 10-year Treasury yield is also up 10 basis points at 2.41%.

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