Interest rates take center stage with banks set to report quarterly results

by | Oct 12, 2023 | Financial

Bank stocks remain under pressure due to high interest rates as financial firms like Club holdings Wells Fargo (WFC) and Morgan Stanley (MS) get ready to kick off earnings season. Like other big banks, Wells Fargo and Morgan Stanley have been caught in the throes of the central bank’s interest-rate-hiking campaign over the past 18 months. Both have been pulling back on lending to be more conservative with their capital as credit conditions have tightened — with a potentially negative impact on revenue streams and overall profits when the firms report earnings in the coming days. “Increasingly, I think that the only thing that can change things with either bank is the end of the tightening cycle so people will be less worried about credit woes,” Jim Cramer said Wednesday . As part of its effort to battle persistent inflation, the Fed has raised its benchmark interest rate 11 times since March 2022, with rates at their highest levels in 22 years . On top of operating in a high-interest-rate environment, financial firms are still rebounding from the collapse of a string of regional lenders, starting with the shuttering of Silicon Valley Bank (SVB) in March. Wells Fargo and Morgan Stanley are down on the year amid the difficult backdrop, falling 4.3% and 8.6%, respectively. The KBW Bank Index , a benchmark sto …

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