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Additional Reading from MarketBeat.com Bank Stocks Get Punished After Earnings—Is Valuation the Real Problem?Written by Chris Markoch. Publication Date: 1/15/2026. 
Article Highlights - Shares of major banks, including JPMorgan, Bank of America, Wells Fargo, and Citigroup, fell 4%–6% after Q4 2025 earnings, despite mostly solid results.
- High valuations and policy uncertainty—particularly around proposed credit card rate caps—have weighed on sentiment.
- Bank of America appears better positioned as a buy-the-dip candidate, given its stronger fundamentals and lower credit risk exposure compared to peers.
Earnings season is off to a rough start. That "Oooof" sound you hear is investors sighing as they watch their last three months of gains in bank stocks evaporate after the banks report earnings. It started with JPMorgan Chase & Co. (NYSE: JPM). The bank, widely considered best in breed, saw its stock fall more than 5% after reporting a double beat and offering optimistic comments from Jamie Dimon about the health of the consumer. JC Parets has spent more than 20 years tracking the market's most important technical signals, and he's now warning that a key date on the calendar could mark the next major turning point for stocks. After calling the 2008 crash, the 2020 collapse, and the exact bottom in 2022, he's sounding the alarm again — and he's sharing the specific day he believes investors need to prepare for. See JC's latest market forecast here That trend continued after reports from Bank of America (NYSE: BAC) and Wells Fargo & Co. (NYSE: WFC). The stocks were down 4.9% and 5.5%, respectively, in midday trading after each bank reported earnings on Jan. 14. Bank of America delivered what was widely seen as a solid report with topline and bottom-line beats. Wells Fargo, by contrast, posted a more mixed report, with revenue falling short of analysts' expectations. Valuation Could Be the Canary in the Coal Mine A common denominator among these large banks — and you can include Citigroup Inc. (NYSE: C), which is also down over 4.5% after earnings — is lofty valuation. Each bank trades at a price-to-earnings (P/E) ratio above its historical average. Quantitative metrics such as price-to-book (P/B) ratios also place these banks above the industry median. The takeaway is simple: these stocks were priced for perfection — a belief that assumed the rules of the game wouldn't change. A recent headline challenged that assumption. The Headline Supporting a Strong Sell-Off Heading into 2026, bank earnings were expected to kick off a strong season. However, news that the Trump administration is considering capping credit card interest rates at 10% has become an overhang, and executives at banks such as Bank of America and Wells Fargo acknowledged the proposal could be detrimental to parts of their business models. The greater downside, though, could fall on consumers the proposal aims to help: lower rates might come with reduced access to credit. Importantly, the proposal is unlikely to progress unchecked. Analysts are skeptical the administration could implement such a mandate by executive order without running into legal and political hurdles, and it would likely face strong opposition in Congress as lawmakers weigh affordability concerns against potential impacts on credit availability and economic growth. Strong Results Suggest BAC's Pullback Was Sentiment-Driven Bank of America's quarter was solid across the board, which makes the post‑earnings pullback look more about sentiment and valuation than fundamentals. Net income rose to $7.6 billion, with EPS up 18% year-over-year (YOY), supported by 7% revenue growth, 10% net interest income growth, and positive operating leverage as the efficiency ratio improved to 61%. Balance-sheet quality held up: average loans were up 8%, deposits rose 3%, the CET1 ratio stood at 11.4%, and the net charge-off rate was just 0.44%. Management also guided to 5%–7% net interest income growth in 2026, suggesting earnings power should continue to compound even in a lower-rate backdrop. A Mixed Quarter Highlights Wells Fargo's Transition Phase Wells Fargo's results were more nuanced but not weak. Revenue grew 4% YOY, with net interest income and noninterest income each up 4%–5%, and pre-tax, pre-provision profit rose 17%, signaling improving core profitability. However, the efficiency ratio remains higher at 64%, and the quarter included $612 million in severance, underscoring that Wells Fargo is still in the middle innings of its restructuring and cost‑takeout story. Credit quality is acceptable but reflects later-cycle trends: net loan charge-offs were 0.43% of average loans, and the allowance for credit losses stands at 1.45% of loans, with elevated reserves tied to commercial real estate office exposures. Bank of America or Wells Fargo—Which Dip Is Worth Buying? The better question may be whether either bank is worth buying after earnings. Both stock charts look remarkably similar and remain in bullish uptrends so long as the price stays above the 150-day simple moving average. In both cases, the Relative Strength Index (RSI) suggests selling pressure may be overdone. 
That said, BAC appears to be the higher-quality buy-the-dip candidate after earnings, thanks to diversified earnings growth and reduced credit tail risk. WFC, meanwhile, still offers more leverage to a benign credit and rate environment for investors willing to accept greater volatility. 
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