KBW bank index rises 0.8% to hit first intraday record in 3 years

KBW bank index rises 0.8% to hit first intraday record in 3 years

The KBW Bank Index, a key gauge of the performance of 24 of the largest U.S. lenders, surged 0.8% to close at its highest level since January 2022. This marks the first intraday record for the index in more than three years, ending a drought of over 900 trading days between highs. The rally comes on the heels of speculation that Federal Reserve Chair Jerome Powell may signal a willingness to cut rates next month [1].

Investors have been buoyed by the possibility of a September rate cut, as Powell carefully opened the door to an interest-rate cut in September. The KBW Bank Index, which tracks the performance of major U.S. banks, has gained almost 16% for the year. The regional banking index also jumped as much as 4.2%, led by Valley National Bancorp and Pacific Premier Bancorp Inc. [2].

The rally in bank stocks is driven by several factors. Banks have benefited from a milder regulatory environment under the Trump administration, which is expected to jumpstart corporate dealmaking and boost advisory revenues. Additionally, the Fed's plan to relax a key capital rule is expected to unlock some reserves and enhance revenue potentials [1].

The inflow into the SPDR S&P Regional Banking ETF (KRE) suggests that investors are optimistic about the regional banking sector's future prospects. The ETF experienced a significant inflow of $163.2 million, a 5.1% increase in outstanding units, despite a slight decline in trading today [2].

Investors are closely monitoring the sector's performance and are prepared for potential fluctuations in the coming months. The sector remains volatile, with the ETF's one-year price performance ranging from a low of $47.06 to a high of $70.25 [2].

When U.S. Federal Reserve Chair Jerome Powell takes the stage at the annual symposium hosted by the Kansas City Federal Reserve at Jackson Hole, Wyoming, on Friday, it will almost certainly be the last keynote address by the banker since his appointment by Trump in 2017. Markets expect dovish commentary from Powell, pointing toward a possible rate cut in September [3].

Powell and other policymakers are facing immense pressure from U.S. President Donald Trump, who has repeatedly asked for a significant rate cut. The Fed's cautious stance on benchmark interest rates due to the uncertainty around President Trump’s tariff policies has been a significant factor in the market's behavior [3].

The U.S. central bank has so far taken a cautious stance on benchmark interest rates due to the uncertainty around President Donald Trump’s tariff policies. While inflation has come down from pandemic-era levels, it remains above the central bank’s 2% mandate. The U.S. consumer price index (CPI) rose 2.7% annually in July, with core CPI rising 0.3% sequentially, the highest increase since January [3].

Texas Capital Bank Wealth Management Services Inc has invested approximately $318,000 in Capital One Financial Corporation, acquiring 1,775 shares of the financial services provider's stock. Capital One Financial reported a 31.4% year-over-year increase in revenue, with earnings per share of $5.48 exceeding consensus estimates by $3.55 [4].

References:
[1] https://www.bloomberg.com/news/articles/2025-08-22/us-banks-head-for-first-record-in-three-years-on-rate-cut-bets
[2] https://www.ainvest.com/news/banks-surge-record-highs-powell-signals-rate-cut-2508/
[3] https://stocktwits.com/news-articles/markets/equity/jerome-powell-set-to-clarify-rate-outlook-fed-independence-at-jackson-hole-speech/chsmyo1Rd0m
[4] https://www.marketbeat.com/instant-alerts/filing-texas-capital-bank-wealth-management-services-inc-invests-318000-in-capital-one-financial-corporation-cof-2025-08-20/