Time to Buy JPMorgan & Citigroup Stock for Potential Rate Cuts

Following July’s optimistic headline inflation data from the Consumer Price Index (CPI), investor sentiment has continued to peak in anticipation that the Fed could cut interest rates in September.Among the sectors that could potentially benefit the most from lower rates is the financials, specifically banks, with JPMorgan JPM and Citigroup C being of interest in particular.    To that point, JPMorgan and Citigroup may be prime beneficiaries of a steepening yield curve, where they can finance their operations at lower short-term rates and boost their margins by lending at higher long-term rates.Keeping this scenario in mind, let’s see why now appears to be an ideal time to buy JPMorgan and Citigroup stock. Strong Capital PositionsAdding to the notion that investing in JPMorgan and Citigroup stock may be lucrative, especially if rate cuts are ahead, is that both banks performed well in the 2025 Dodd-Frank Act stress tests, an annual evaluation by the Federal Reserve to assess whether large banks have enough capital to withstand economic downturns.Regarding core capital versus risk-weighted assets, JPMorgan and Citigroup both had a standardized CET1 Capital Ratio well above their minimum required percentage of 4.5% at 15% and 13.5%, respectively.As the largest domestic bank in the U.S., JPMorgan stood out with more than $4 trillion in total assets and over $350 billion in shareholders’ equity. Being well-positioned to continue capital distributions, JPMorgan has authorized a new $50 billion share repurchase plan and announced it will be increasing its quarterly dividend by 7% to $1.50 per share during the third quarter.Image Source: Zacks Investment ResearchSimilarly, Citigroup has illustrated its good financial health by raising its quarterly dividend by 7% as well to $0.60 per share in July. Citigroup also authorized a $20 billion share repurchase plan and has a strong cushion for any future challenges with a net cash position of over $400 billion.Image Source: Zacks Investment Research Positive EPS RevisionsMaking JPMorgan and Citigroup stock more attractive ahead of potential rate cuts is that they are already benefiting from a very positive trend of earnings estimate revisions.In the last 30 days, JPMorgan’s FY25 EPS estimates have risen 5% from $18.53 to $19.50. Plus, FY26 EPS estimates are up 3% in the last month from $19.75 to $20.38.Image Source: Zacks Investment ResearchAs for Citigroup, its FY25 and FY26 EPS estimates are up roughly 4% in the last 30 days, with it noteworthy that these projections now call for more than 27% annual earnings growth for the foreseeable future.  Image Source: Zacks Investment Research Bottom LineWith investors starting to clamor for a September rate cut, the outlook for JPMorgan and Citigroup may become even more appealing. Thanks to strong capital positions, these banks have continued to reward their shareholders with dividends and buybacks, and their stocks look poised to move higher when considering the rising EPS revisions.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in the coming year. While not all picks can be winners, previous recommendations have soared +112%, +171%, +209% and +232%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report JPMorgan Chase & Co. (JPM): Free Stock Analysis Report Citigroup Inc. (C): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks