Shares of Bank of America edged lower on Monday, falling 0.2% to $56.42, as the financial sector lagged behind a rising broader market. The Financial Select Sector SPDR Fund (XLF) dipped 0.2%, contrasting with a 0.7% gain for the SPDR S&P 500 ETF.
Bank stocks remain sensitive to interest rate expectations. While higher yields can improve net interest margins, they also increase funding costs and can dampen loan demand. The 10-year U.S. Treasury yield held steady near 4.22% as traders awaited fresh economic data to gauge the Federal Reserve's policy path.
Recent survey data from the New York Federal Reserve showed one-year inflation expectations eased to 3.1% in January from 3.4% the prior month. Three-year and five-year expectations held at 3%. This suggests households perceive the central bank as committed to returning inflation to its target.
Wall Street's attention is fixed on upcoming economic releases, including the delayed January payrolls report on Wednesday and the Consumer Price Index on Friday. Market strategists note investor unease regarding current spending levels and substantial investment plans.
Among other major banks, JPMorgan Chase rose 0.3%, Citigroup gained 1.5%, and Wells Fargo slipped 0.7%. Analysts at Bank of America highlighted that stock market rallies have fueled bond demand through portfolio rebalancing, but cautioned this support may wane later in the year.
Bank of America CEO Brian Moynihan is scheduled to speak at the BofA Securities Financial Services Conference on February 10. His remarks, along with the pivotal jobs and inflation data, are expected to significantly influence market sentiment and the outlook for financial stocks in the near term.
