The Fed Eases Its Stress Tests,Giving WallStreet Some BreathThe Fed Eases Its Stress Tests, Giving Wall Street Some Breathing Room
By Ion Jauregui – Analyst at ActivTrades
The U.S. Federal Reserve (Fed) has announced a major reform to its banking stress tests — the resilience checks that, since the 2008 financial crisis, have served as the key barometer of the U.S. financial system’s stability.
The new regulation aims to make the exams more transparent and predictable, a change that many on Wall Street view as a regulatory relief. For the first time, the Fed will publish the internal models used in these tests and open a public consultation period to receive feedback from financial institutions before implementation.
The move has been welcomed by the Bank Policy Institute and the American Bankers Association, two of the sector’s main lobbying groups, which had even filed a lawsuit against the central bank over the lack of clarity in its models. With this reform, the legal action has been suspended, and industry representatives have hailed the decision as “a positive step for economic growth.”
However, not everyone within the Fed shares the optimism. Governor Michael Barr, who oversees supervision, warned that the new policy “could weaken the effectiveness of the tests,” allowing banks to adjust their balance sheets to pass adverse scenarios without truly strengthening their solvency.
JPMorgan Chase, the Main Beneficiary
The largest U.S. bank, JPMorgan Chase, could emerge as one of the biggest winners under this new framework. With assets exceeding $4.5 trillion and steady profits driven by its investment banking and trading divisions, the institution led by Jamie Dimon has demonstrated strength well above the sector average.
With the early release of the stress test models, JPMorgan will be able to optimize its capital more efficiently and adjust its dividend and share buyback strategy without the risk of regulatory surprises. In its latest quarterly results, the bank already announced an 8% increase in its buyback program and an improvement in its CET1 capital ratio, reinforcing its leadership position.
Still, some analysts warn that overly relaxed testing could weaken financial safety buffers at a time when corporate credit and public debt are rising sharply.
Technical Analysis (Ticker AT: JPM)
JPMorgan Chase & Co. shares closed on Friday at $300.44, posting a positive session after rebounding from a support area that coincides with the consolidation range established at the end of the previous semester.
Since late June, the stock has traded within a lateral range between this year’s all-time highs ($316.47) and the initial upward impulse zone near $278.95, with a point of control (highest traded volume level) around $290.03.
In the short term, the price needs to break above the 50- and 100-period moving averages to confirm a new bullish leg and resume its move toward new highs, setting a technical target around $350 per share.
If the $278.95 support fails to hold, a pullback toward the previous area around $266.93 could follow. The RSI stands at 47.75%, within the neutral zone, reflecting balanced buying and selling pressure. Meanwhile, the MACD remains in negative territory, though its histogram shows signs of recovery — a potential early indication of an upward crossover.
Finally, the ActivTrades US Market Pulse indicates a neutral risk environment, suggesting that the market has yet to define a clear short-term direction.
The Debate Is On: More Transparency or More Risk?
One thing is certain — with this reform, the Fed has opened a new chapter in the relationship between regulators and banks, one that Wall Street is watching with evident satisfaction.
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