Bank stocks

The Federal Open Market Committee's decision to reduce interest rates for the first time in nine months lifted bank stocks Wednesday. The 25-basis-point reduction could lead to net interest income headwinds now, but loan growth later, analysts said.

Fears of a recession intensified after President Trump unveiled his plan to impose a minimum 10% tariff on all U.S. imports, and the KBW Nasdaq Bank Index tumbled by nearly 10%.

The looming initial public offering from Swedish payments firm Klarna comes in the foreground of tariff uncertainties and inflationary pressures.

The KBW Nasdaq Bank Index is down more than 7% year to date. Analysts blame confusion caused by President Trump's evolving tariff policies and heightened worries about an economic downturn that could hurt banks' credit quality.

Analysts say lenders' shares could rally on deregulation, lighter tax burdens and a resurgence of M&A. Declining interest rates and lower loan losses could further bolster bottom lines and attract investor interest.

Anticipated interest rate cuts could help stressed borrowers, but such a shift in monetary policy may curb lending income.

Bank stocks are up this year as interest rates have leveled off and there are hopes that pressure on lenders' profits could moderate.

Institutions and their investors are facing pressure from climate activists, cautiously awaiting interest rate cuts and adjusting to new Federal Reserve and FDIC policies.

Some concerns linger over the sector after Silicon Valley Bank's collapse last month. The most pressing worry now, analysts say, is not whether banks will survive but how much money they'll make in the coming months.

The House passed the legislative package, which includes an excise tax on stock buybacks, in a 220-207 vote.