While stock market investors have been excited about the Federal Reserve’s expected interest rate cuts, the move could hurt big banks, CNN Business’ own Matt Egan told Alison Kosik on the Markets Now live show.
Bank of America (BAC), JPMorgan (JPM) and Wells Fargo (WFC) all said in their earnings reports this week that their net interest income could decrease this year if the Federal Reserve cuts interest rates.
When the Fed cuts rates, that means rates on things like loans and mortgages will also decline, eating into the bottom line for banks. When the Fed was still raising rates, the net interest income for banks was growing.
In second quarter earnings, however, banks fared well, which was in part thanks to the strength of their consumer business.