JPMorgan Shares Rise Ahead Of Fed Decision: Why A 'Hawkish Cut' May Ignite The Bank's Next Rally

JPMorgan Chase & Co (JPM) shares are trading higher Wednesday morning as investors position themselves ahead of Wednesday afternoon’s pivotal Federal Reserve decision.

While a 25-basis-point cut is nearly fully priced in, the real market mover will be the potential for a “hawkish cut,” a scenario where the Fed eases slightly but signals a potential pause in 2026. Here’s what investors need to know.

• JPMorgan Chase (JPM) stock is trading near recent highs. Where is JPM stock headed?

What To Know: Conventionally, rate cuts are viewed as a headwind for banks due to Net Interest Income (NII) compression. The logic is straightforward: as the Fed lowers the benchmark rate, the yield banks earn on variable-rate loans drops, squeezing the spread between what they pay depositors and what they collect from borrowers.

However, for a diversified giant like JPMorgan (JPM), this NII erosion is likely to be eclipsed by far more potent catalysts. The primary bullish driver is the thawing of capital markets.

High interest rates effectively freeze global deal-making. A cut signals stabilizing capital costs, unlocking a massive backlog of M&A and IPOs. As the industry leader, JPMorgan (JPM) stands to capture substantial fee revenue that far outweighs marginal dips in interest income.

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Furthermore, a cut serves as a critical defensive mechanism for the bank's balance sheet. Lower rates ease debt-servicing costs for consumers, preventing defaults and allowing JPMorgan (JPM) to release billions in loan loss reserves directly into profits.

Additionally, as rates fall, the market value of the bank's vast bond portfolio rises, immediately boosting tangible book value. Ultimately, a “hawkish cut” may provide an ideal sweet spot: rates low enough to reignite deal flow, yet high enough to maintain healthy lending margins.

Benzinga Edge Rankings: Benzinga Edge data highlights strong underlying price action for JPMorgan (JPM), with the stock boasting a robust Momentum score of 72.30, signaling sustained buying pressure despite mixed signals in shorter-term trends.

JPM Price Action: JPMorgan Chase (JPM) shares were up 1.78% at $305.92 at the time of publication on Wednesday, according to Benzinga Pro data.

Looking at technical indicators, the proximity to the 50-day moving average suggests that traders should watch for potential resistance at this level. If the stock can break above $306.55, it may attract more buyers, pushing it toward the 52-week high of $322.25.

Conversely, if the price fails to hold above the psychological support level of $300, it could test lower support levels, including the $298.45 low observed during the session.

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