U.S. bank stocks are under pressure as the Federal Reserve’s new rate-hiking cycle revives concerns from 2023. In September 2026, the Fed began raising rates for the first time in three years to combat persistent inflation. It lifted the federal funds rate to a range of 3.75% to 4.00%, with further hikes possible. The move is creating headwinds for lenders, despite their generally stronger balance sheets than during the previous turmoil.
Rising rates can boost net interest income, but higher funding and deposit costs are compressing margins. A flattening yield curve is also squeezing profitability. Unrealized losses on securities portfolios climbed to $325.1 billion in the first quarter of 2026, recalling vulnerabilities that contributed to the 2023 banking crisis. Wells Fargo, JPMorgan Chase, and Goldman Sachs shares declined following the Fed’s announcement.