JPMorgan Hits Record High as Financial Sector Sets Up for Higher Highs

Move over, Silicon Valley, Wall Street is having its main character moment. After surging 37% from April lows, JPMorganJPM

hit all-time highs Wednesday. Analysts say the overall financial sector is poised for a breakout, as several tailwinds emerge ahead of the start of earnings season.

• BeyondJPM
  ’s impressive rally, theXLF
  ETF, tracking S&P 500 financial stocks, has swelled by 17.78% since the “Liberation Day” selloff — and theKRE
  Regional Banking ETF is up 20.57%.
• Speculation of early Fed rate cuts fueled the rise, along with Wells Fargo’sWFC
  freedom from a seven-year asset cap freeze — forming technical indicators that signal a tech-like breakout (Axios).

Banking steroids: Notably, Wednesday’s proposal to ease a key capital ratio would free up Wall Street’s funds. The move lets mega banks hold fewer reserves against low-risk assets like Treasuries, allowing them to lend more freely while boosting Treasury market participation, thus driving down interest rates. Ironically, while American banks celebrate this deregulatory gift, some Wall Street pros remain bullish on European banks, up nearly 30% this year. As usual, the secret to banking success is once again less regulation and lower rates — revolutionary stuff.