JPMorgan Chase & Co. shares showed minimal movement Friday, trading up 0.2% at $303.36 by late morning, following a judicial ruling that allows customers to advance portions of a proposed class action lawsuit. The litigation challenges the bank's practice of paying minimal interest on certain cash-sweep accounts, with plaintiffs alleging rates as low as 0.01% to 0.03% while short-term U.S. rates exceeded 5%.
Cash-sweep programs automatically transfer idle client funds into deposit accounts. The interest rates paid on these balances directly impact bank profitability through net interest income—the difference between earnings on assets and payments to depositors. This spread has come under increased scrutiny as customers seek higher yields in a rising rate environment.
The broader U.S. equity market declined, setting up for its most challenging week since November. Technology stocks led the downturn, overshadowing softer-than-expected inflation data. "The key takeaway is that the disinflation trend persists," noted Michael Metcalfe, head of market strategy at State Street Markets.
Bank stocks exhibited mixed performance. Wells Fargo gained 0.7%, Bank of America held flat, while Citigroup and Goldman Sachs dipped 0.2% and 0.3%, respectively.
Internally, JPMorgan announced a restructuring to deepen its data and artificial intelligence capabilities within its commercial and investment bank. The firm appointed insider Guy Halamish as chief operating officer for data and AI, according to an internal memo. He will oversee data strategy, with chief data officers across business lines now reporting dually to Halamish and their unit heads.
The newly formed group will manage data quality, governance, and infrastructure for "AI agents"—programs designed to execute tasks autonomously—and drive operational changes in credit and client onboarding processes.
While the court pared back some claims, the lawsuit could pressure shares if it becomes protracted or costly. Investors are also weighing potential impacts on bank profits should short-term rates decline later this year, compressing the interest spread that has bolstered earnings.
Market attention turns to next week's economic calendar, with U.S. markets closed Monday for the Washington's Birthday holiday. Key releases include January retail sales on Tuesday, Federal Reserve minutes from the January meeting on Wednesday, and the advance reading of fourth-quarter GDP on Friday.
