Banks Pass ‘Less Vigorous’ Stress Test In Latest Positive Boost for Financials

The year is almost halfway over, but for the banks, a hard-fought six months on Wall Street might have bankers celebrating Christmas in July. The end of market turmoil, an M&A thaw, and the promise of lower rates are putting 2025 on 5x speed for banks — momentum only helped as the Federal Reserve rendered the results of their annual stress test on financial institutions — and they passed with flying colors.

• All 22 US banks that were subject to ‘notably less vigorous’ stress tests passed, marking a second consecutive year in which all major institutions made the grade.
• The news boosted shares of Goldman SachsGS
  , JPMorganJPM
  , and CitiC
  — up 2.5%, 1%, and 0.9%.

Earnings on deck: The update comes just 11 days before the start of bank earnings, which will kick off with a firestorm of positive catalysts. Not just the stress test win, but analyst optimism that big-name players will benefit further from “easing capital rules, improved operating leverage, and revenue growth” as interest rates fall, dealmaking rises, and the markets continue to bubble up.