Investing.com - Wall Street banks climbed Friday as investors cheered news the Federal Reserve had given the lenders the nod to dole out large sums of cash to shareholders.
The Fed on Thursday said the banks had passed the Comprehensive Capital Analysis and Review (stress test), paving the way for the banks to go ahead with plans to ramp up dividends and stock buybacks.
JPMorgan Chase (NYSE:JPM), Citigroup (NYSE:C), and Goldman Sachs (NYSE:GS) were on track to end the day 3% higher, with the Financial Select Sector SPDR ETF (NYSE:XLF) up more than 1%.
JPMorgan revealed plans to buy back $29.4 billion in shares this cycle and raise its quarterly dividend 12.5% to 90 cents a share, taking the total cash returned to shareholders to $40 billion over the next year.
Citigroup said it would target up to $17.1 billion in stock buybacks and bolster its dividend by 13.3% to 51 cents a share.
Wells Fargo (NYSE:WFC) will look to buy back $23.1 billion in stock in the next year and increase its dividend 13.3% to 51 cents a share.
The two-part stress tests, the first of which was carried out last week, are administered annually by the Federal Reserve and aim to test whether a large bank is sufficiently capitalized to survive a sudden economic crisis.