Major U.S. banks experienced a rise in their stock prices on Monday because all 22 participating institutions passed the Federal Reserve’s annual stress test which enabled them to distribute billions of dollars for dividend payments and stock repurchases.
The central bank stated that participating lenders possess sufficient capital to survive severe economic conditions while maintaining their lending activities. The test results brought positive sentiment to analysts who face economic unpredictability.
The stock prices of Goldman Sachs increased by 2% as JPMorgan and Citigroup and Bank of America and Wells Fargo experienced small rises. M&T Bank together with Morgan Stanley experienced small market increases.
The tests evaluated how bank financial statements would perform under simulated stress conditions. RBC Capital Markets confirmed through the results that banks possess strong capital position for returning funds to investors. The stress capital buffers (SCBs) will decrease by 100 basis points according to analysts who predicted a decline between 30–50 basis points.
The Raymond James analysts view the results as beneficial for investors who will likely show increased interest in this sector.
The 2025 stress test applied less stringent conditions than 2024 because real-world economic conditions created a less severe recession scenario in the models.
The successful completion of the exam enables banks to distribute shareholder rewards while demonstrating their system’s stability to regulators.
