Stress tests

Starting at 4:30 p.m., the 22 large banks that were stress-tested by the Fed can release information about their plans for dividend increases and share repurchases.

While banks will likely increase near-term dividend plans, analysts and investors are more focused on the long-term outlook for capital requirements from regulators.

The largest U.S. banks took less of a capital hit under the Federal Reserve's hypothetical stress scenario than they did last year, but averaging the two sets of results could impact next year's regulatory requirements.

Analysts are predicting stronger results this year after a disappointing outcome in 2024.

Despite its commitment to change its stress testing program, the Federal Reserve is defending its current practices in court. That argument raises thorny legal questions about whether stress tests are more like rules or adjudications.

The Federal Reserve proposed a rule to average individual banks' stress test results over two years, a measure the central bank says would reduce volatility in bank capital requirements from year to year.

The banking industry groups suing the Federal Reserve over its stress testing practices filed a motion for a summary judgment in the case, arguing that a quick resolution could ensure changes are made prior to the 2026 stress testing cycle.

With the Federal Reserve eyeing changes to its annual examination of large bank resilience, this year's test could be the last of its kind.

The Bank Policy Institute, the American Bankers Association and others said proposed changes would address "some if not all" of banks' concerns about stress tests, but they are filing the lawsuit to preserve their legal right to do so.

Large and regional banks again proved their resiliency in the Fed's annual exams. But analysts noted that a few lenders faced some negative surprises — a development that may scuttle investor hopes for share buybacks by those banks.