Bank of America Corp. shares traded lower on Tuesday, falling roughly 1% to $55.82 during midday activity. The broader financial sector exhibited weakness, with the KBW Bank ETF declining 0.7%.
Economic Data Drives Market Sentiment
The downward move coincided with a softer-than-anticipated U.S. retail sales report for December. The data showed a stall in consumer spending, with the core "control group" measure, a direct input into GDP calculations, dipping 0.1%. This pushed the benchmark 10-year Treasury yield toward 4.15%. Lower yields can compress the net interest margin for banks, a key profitability metric representing the difference between loan income and deposit costs.
Charlie Ripley, a portfolio manager at Allianz Investment Management, noted the retail figures suggested the economy may not have been as robust as markets had priced in during the final quarter of the year.
Diverging Views on the Rate Path
Federal Reserve commentary added to the market's focus on monetary policy. Cleveland Fed President Beth Hammack stated interest rates could remain at current levels "for quite some time," deeming them "appropriate" given persistent inflation risks.
Offering a contrasting outlook, Bank of America CEO Brian Moynihan stated he expects interest rates "are going to continue to come down," characterizing that trajectory as "constructive" for the business environment. Moynihan made these remarks during the BofA Securities Financial Services Conference, also noting that deposit growth at the bank "is good."
Looking Ahead to Key Catalysts
The market's immediate attention turns to a pair of critical economic releases: the U.S. jobs report due February 11 and the Consumer Price Index (CPI) inflation data scheduled for February 13. These reports will provide fresh signals on the health of the labor market and price pressures, directly influencing expectations for the Federal Reserve's interest rate policy.
Bank of America's sensitivity to interest rates has been a focal point since its last earnings report. In mid-January, the company projected net interest income would increase by 7% for the current quarter and reaffirmed its full-year 2026 growth target of 5% to 7%. The bank is scheduled to report its next quarterly results on April 15.
