Bank stocks

Megadeal activity picked up in June.

Lenders have been an underdog in the broader market's rally. Now, with stress-test results and the easing of bank capital rules on the horizon, there's a chance for bank stocks to break out.

Wall Street continued its sell-off of financial institutions as the increasing likelihood of a U.S. recession fuels fears of revenue pressures.

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.

Federal Reserve policymakers said that the U.S. economy remains on sound footing, despite recent setbacks, and that two interest rate cuts lie ahead. Bank stocks advanced on hopes for loan growth and more M&A.

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.

A midweek rally followed robust bottom-line results from JPMorgan Chase, Wells Fargo, Bank of America and several other large banks. But further interest rate cuts may be needed to sustain momentum.

A slower rate of price increases would boost the likelihood of an interest-rate cut that could expand loan demand and lower banks' deposit costs. A higher pace of inflation, however, could derail those catalysts.

Primis Financial had to delay several reports to the SEC due to an accounting misclassification error, which raised the possibility that the bank's stock would no longer trade on Nasdaq. Executives say they're "optimistic about putting this behind us."