Fed Rate Hike Fails to Lift Bank Stocks as Market Sees Red

The recent Fed rate hike was expected to boost bank stocks, but that hasn't been the case. The Federal Reserve raised its target range to 4% on September 17, 2026, for the first time in three years.

JPMorgan Chase fell 1%, Wells Fargo dropped 3%, and Goldman Sachs gave back 4%. This unexpected reaction could be a warning about where the trade goes from here. The sector had already priced in the rate hike, with the SPDR S&P Regional Banking ETF up 12.6% over the past year and 13.55% year to date.

JPMorgan itself has seen significant gains, with a 13.75% one-year gain and a 151.42% five-year run. However, when everyone has already bought, the news arrives without a marginal buyer. The curve is also not helping, as the 10-year minus 2-year spread closed at 0.25% on September 18, down from 0.74% in February.