Bonds rally as rate hikes fade + big banks return cash — buy JPMorgan on the dip
With the Fed unlikely to raise rates after the weak jobs report, JPMorgan just announced a massive $50 billion stock buyback and raised its dividend. Lower rates plus cash returned to shareholders is a strong setup for bank stocks.
Idea
The dismal June jobs report has traders convinced the Fed is done hiking rates, which sent bond prices soaring. That same rate-friendly environment is gold for big banks like JPMorgan Chase, which simultaneously announced a $50 billion buyback authorization and a dividend increase. Lower borrowing costs tend to boost lending margins, while buybacks mechanically boost earnings per share by reducing share count. The combination of a dovish macro shift and aggressive shareholder returns makes JPM a compelling hold near record highs.