Bank Stocks Sell-Off: Q4 2025 Earnings Analysis

On Wednesday, January 14, 2026, major U.S. bank stocks experienced significant declines following their fourth quarter 2025 earnings releases, creating what analysts described as a “rough start to 2026” for the banking sector [2]. The sell-off was particularly pronounced for Wells Fargo (WFC), Bank of America (BAC), and Citigroup ©, while JPMorgan Chase (JPM) continued its downward trajectory from Tuesday’s report [1][2].

reported its highest full-year net income in four years at $7.6 billion for Q4, representing a 12% year-over-year increase. The bank’s revenue of $28 billion reflected a 7% YoY increase, driven by higher lending margins and fee income. Trading fees rose 10% to $4.5 billion, with equities leading the growth [2][3]. Despite these strong results, the stock declined 4.58% on the earnings news, suggesting investor expectations had been priced even higher ahead of the report.

also achieved its highest full-year net income in four years, with Q4 net income of $5.4 billion, up 6% YoY. However, earnings per share of $1.62 missed analyst forecasts of $1.67, with the shortfall attributed to a $0.14 severance cost impact and a $612 million workforce reduction charge [2][8]. The EPS miss appeared to be the primary driver of the stock’s 5.15% decline, the sharpest among major banks.

faced the most significant challenges, with Q4 net income declining 13% YoY to $2.5 billion. The bank recognized a $1.2 billion loss related to the sale of its Russia unit, which significantly impacted results despite a strong 35% surge in investment banking revenue [2][4]. The stock declined 3.96% on the news.

reported Q4 net income of $13.0 billion, down 7% YoY, with EPS of $4.63. The stock has been sliding since reporting on Tuesday, with analysts noting it may remain “range bound until clarity on credit card APR” emerges [7]. Regulatory tensions regarding credit card interest rates have created uncertainty for the banking sector.

The banking sector sell-off contributed to broader market weakness on January 14, 2026. The S&P 500 fell 0.58% to 6,897.34, the NASDAQ dropped 0.93% to 23,343.60, and the Dow Jones declined 0.21% to 48,986.58 [0]. Sector performance was mixed, with Financial Services rising +0.46% while Technology fell -1.29% and Consumer Cyclical declined -1.96% [0].

Technical analysis reveals all four major banks remain above their 200-day moving averages, indicating longer-term uptrends remain intact despite the earnings-related sell-off [0]. Wells Fargo trades at $94.10 (20-day MA) with a 200-day MA of $80.70, Bank of America at $55.43 (20-day MA) with a 200-day MA of $48.28, Citigroup at $117.78 (20-day MA) with a 200-day MA of $91.73, and JPMorgan at $323.09 (20-day MA) with a 200-day MA of $289.21 [0].

A notable disconnect exists between the solid earnings results and the negative stock performance. Both Bank of America and Wells Fargo reported their highest full-year net income in four years, yet both stocks declined significantly following their reports. This pattern suggests investor expectations had been priced higher, with traders focusing on EPS misses and forward-looking concerns rather than year-over-year improvements. The market appears to be penalizing banks for missing near-term forecasts while rewarding longer-term strategic execution.

The original event headline references “making sense of AI power demand,” highlighting a broader market theme reshaping sector leadership [5]. Data center power density is expected to reach 176 kW per square foot by 2027, with AI server racks requiring 50x more power than traditional internet servers [5]. AI-related data center investment could reach $5+ trillion over the next five years, with U.S. companies expected to account for 40% of data center spending [5]. BNY’s analysis indicates a “quiet repricing” is occurring, with energy positioning turning overweight as technology exposure declines [6]. This sector rotation may be contributing to pressure on traditional financial sector stocks despite solid fundamentals.

A significant concern for the banking sector involves potential regulatory action on credit card APR. Analysts note JPMorgan stock may remain constrained until clarity on credit card interest rate regulations emerges [7]. This regulatory uncertainty, combined with ongoing workforce restructuring costs at multiple banks, creates near-term volatility even when fundamental earnings remain solid.

Citigroup’s $1.2 billion loss related to the sale of its Russia unit highlights ongoing geopolitical risks for globally diversified banks [2]. While the bank generated strong investment banking revenue growth of 35%, international divestitures and emerging market exposures continue to create earnings volatility that the market appears to be pricing into stock valuations.

The analysis reveals several risk factors warranting attention.

remains essential, with provision for loan losses and consumer delinquencies requiring ongoing observation. faces uncertainty from interest rate dynamics and deposit competition. , particularly regarding credit card APR caps and capital requirements, could significantly impact profitability across the sector. , including workforce reductions and restructuring charges, will continue affecting near-term earnings. from international operations create additional volatility, as demonstrated by Citigroup’s Russia-related loss.

The technical indicators [0] show all four major banks remain in long-term uptrends above their 200-day moving averages, which historically correlates with sustained bullish momentum. However, the EPS misses and guidance concerns that triggered the current sell-off warrant close monitoring for potential trend weakness.

Despite the near-term sell-off, several factors suggest potential opportunity. Bank of America’s record full-year performance demonstrates strong fundamental execution in core banking operations. The 10% growth in trading fees, led by equities, indicates continued market share gains in capital markets [2][3]. Wells Fargo’s workforce reduction to 205,000 employees represents a 6% YoY reduction, suggesting ongoing efficiency improvements that could enhance long-term profitability [2]. Citigroup’s 35% surge in investment banking revenue signals strong deal flow and underwriting activity despite challenges in consumer banking [4].

The longer-term technical structure remains constructive, with all major banks maintaining positions above critical moving averages. Investors with longer time horizons may find the current price levels attractive relative to earnings fundamentals, though near-term volatility may persist.

The January 14, 2026 bank stock sell-off reflects a combination of earnings-related disappointments and broader market rotation dynamics. Wells Fargo declined 5.15% following an EPS miss of $1.62 versus the $1.67 analyst forecast, Bank of America fell 4.58% despite record annual net income, Citigroup dropped 3.96% amid a 13% YoY earnings decline driven by Russia-related charges, and JPMorgan continued sliding from its Tuesday report [1][2].

Market-wide, the S&P 500 declined 0.58% and the NASDAQ dropped 0.93%, with Technology and Consumer Cyclical sectors performing worst [0]. The AI power demand theme referenced in the original headline reflects a broader sector rotation toward energy and away from traditional financial and technology exposures as investors position for multi-trillion dollar data center investments [5][6].

From a technical perspective, all four major banks maintain positions above their 200-day moving averages, supporting the view that longer-term uptrends remain intact despite earnings-related volatility [0]. Key monitoring areas include credit card APR regulatory developments, credit quality trends, and net interest income trajectory as the Federal Reserve’s policy path becomes clearer.

The disconnect between solid year-over-year earnings growth and negative stock reactions suggests investors are focusing on forward guidance and near-term execution challenges rather than historical performance. This dynamic may create short-term volatility while longer-term fundamentals remain constructive for the sector.