Deregulatory push has made financial stocks like JPMorgan into low-key market winners
Jamie Dimon appreciates this run-up.
Another day, another record high for JPMorgan Chase and Coinbase — two extremely different companies but both beneficiaries of a deregulatory push that has made financial stocks into outperformers among the S&P 500 over the last 12 months.
JPMorgan, the largest US bank by assets, has rallied in part because it’s seen as a prime beneficiary of growing momentum to ease a post-financial-crisis rule that forced banks to operate with less borrowed money — i.e. more of their own capital. (Being able to operate with more leverage opens up the opportunity to juice profits, but it can also add risk. Remember, these guardrails were put in place after largesses that sent the world spiraling into a generational financial disaster.)
Bank stocks aren’t typically all that exciting, unless you’re really into net interest margins. But they’ve been on a tear: the S&P 500 subindex that tracks banks alone was up 32% over the last year, with giants like JPMorgan up 47%, Morgan Stanley up 45%, Goldman Sachs up 51%, and Wells Fargo up 40%
Coinbase, meanwhile, has exploded since the Senate passed the bi-partisan GENIUS Act on June 17, which regulates so-called crypto “stablecoins.” The bill is the first in what the industry hopes will be a parade of new rules establishing the legitimacy of crypto and linking it to the broader financial sector.
Coinbase is the top performer in the S&P 500 financial sector over the 12 months, rising more than 65%. And the financial sector is the top performer of the index as a whole, rising almost 25% for the last year.
But, of course, in terms of driving the market-cap-weighted S&P 500 Index higher, the information technology sector is the big dog. It has a 33% weighting in the index — thanks to the presence of market cap giants like Nvidia and Microsoft — making it the prime mover of the market.
