Shares of Bank of America (BAC) declined 0.3% to $52.36 in Friday's session, as investors weighed mixed economic signals and a fresh legal challenge for the financial giant.
Inflation Data Fuels Rate-Cut Speculation
The latest Consumer Price Index showed U.S. inflation rose 2.4% year-over-year in January, with a monthly increase of 0.2%. This cooling trend has solidified market expectations for the Federal Reserve to potentially initiate interest rate cuts by June. For banks, lower rates can pressure net interest income, a key profit driver, by compressing the margin between loan yields and deposit costs.
Legal Setback Adds Pressure
Separately, a U.S. judge ruled that a proposed class-action lawsuit tied to the late financier Jeffrey Epstein can move forward against Bank of America. The bank has stated it did not act intentionally in matters related to Epstein. The case is scheduled for trial on May 11.
While the broader financial sector held steady, with the SPDR S&P 500 ETF (SPY) gaining 0.3%, BAC underperformed its peers. The stock had fallen sharply in the prior session, part of a broader market sell-off.
Market Holiday and Upcoming Catalysts
U.S. markets will be closed Monday for the Presidents Day holiday. Investor attention will quickly turn to the release of the minutes from the Fed's late-January meeting on February 18, followed by key Personal Consumption Expenditures (PCE) price data on February 20.
Analysts remain divided on the inflation outlook. Some highlighted encouraging trends in the headline number, while others pointed to persistent strength in core services inflation, excluding shelter, which could influence the Fed's policy path and, by extension, bank stock performance.
