Bank of America: Fundamental and Technical Strength Signal a Buy

Bank of America Corporation (BAC) stands at a critical point amid shifting economic conditions and evolving market dynamics. The Federal Reserve’s steady rate policy supports interest income, while loose financial conditions boost lending activity. Stable yields, strong credit quality, and healthy consumer demand continue to drive growth.

At the same time, global trade policy, dollar volatility, and regulatory developments shape capital flows and liquidity. Despite market volatility and stretched valuations, the bank’s earnings remain strong. Its balance sheet is solid, and technical trends point to continued upside. This article explores how economic, financial, and technical factors shape Bank of America’s position to project the next move in stock price.

Bank of America Delivers Strong Q2 2025 Earnings Amid Stable Growth

Bank of America reported net income of $7.116 billion in Q2 2025. This marks a year-over-year increase from $6.9 billion. The strong earnings reflect higher net interest income and solid performance across business lines. The revenue also increased by 4% year over year to $26.46 billion. The chart below shows strong trends in the bank’s profitability. This growth came despite lower investment banking fees.

The strong increment in net interest income was due to the growth in fixed-rate asset repricing and higher deposit growth. This marks the fourth consecutive quarter of sequential NII growth.

The bank increased its loan loss provision to $1.6 billion. Noninterest expense increased 5% to $17.2 billion, driven by investments in people, brand, and technology. Despite this, expenses declined from Q1 due to lower tax-related costs. The bank remains focused on efficiency while investing in growth.

The balance sheet for Bank of America remains strong. The chart below shows that the total deposit balances have increased to $2.012 trillion. On the other hand, the net loan assets increased to $1.123 trillion. The gap between deposits and loans has widened significantly in recent years. This means Bank of America holds more liquidity than it lends out. The surplus gives the bank flexibility to invest, manage risk, and meet regulatory requirements. However, the lower loan-to-deposit ratio may limit interest income growth unless loan demand accelerates.

The bank returned $7.3 billion to shareholders through dividends and buybacks. It also announced an 8% increase in the quarterly common stock dividend starting in Q3. Moreover, CEO Brian Moynihan highlighted strong consumer spending and healthy credit conditions. He emphasised momentum in business lending and solid asset quality.

How Economic Shifts and Market Trends Are Shaping Bank of America’s Future

Interest Rates and Credit Conditions Fuel Lending Momentum

The Federal Reserve kept the interest rate steady at 4.25% to 4.50%. This decision supports Bank of America’s interest income. Loan margins remain elevated as the bank continues to earn strong spreads between lending rates and deposit costs. The 10-year Treasury yield currently ranges between 4.2% and 4.6%, and consolidates above $4.0%. This yield stability reduces volatility in the bank’s fixed-income holdings and helps manage balance sheet risk.

Fed policy is now considered neutral. It neither tightens nor stimulates the economy. While this avoids recession risk, it also limits further gains from higher interest rates. If GDP slows in the second half of 2025, the Fed may shift toward rate cuts. That would narrow interest spreads and put pressure on net interest margins for Bank of America.

Meanwhile, financial conditions have eased further. The Chicago Fed National Financial Conditions Index dropped to -0.57. This is the lowest level since November 2021. The loose credit conditions support borrowing and increase loan demand. Bank of America stands to benefit from this trend through higher lending activity and more substantial revenue across consumer and commercial segments.

Yields, Valuations, and Labour Trends Define the Risk Landscape

Treasury yields remain stable, which helps Bank of America limit mark-to-market losses on its securities portfolio. The chart below shows that the alignment between yield levels and nominal GDP growth creates a favourable environment for managing duration risk.

When Treasury yields rise above nominal GDP growth, it signals a restrictive monetary policy aimed at containing inflation. This condition was evident between 1980 and 1998, as shown in the chart. In 2025, the yield is again attempting to break above nominal GDP growth.

Moreover, US equity markets remain in an uptrend, though valuations are stretched. The chart below shows that the Shiller CAPE ratio has reached 38.66.

On the other hand, the P/E ratio for the S&P 500 has reached 20.25. These ratios are above the historical averages. These conditions support short-term gains in trading and investment banking revenue. However, a potential correction could reduce investor activity and pressure fee-based income.

Additionally, the labour market remains strong, with unemployment at 4.2%. This is a 0.1% increase from the last month, but this is the same level seen in March, April and May.

This stability supports household income and credit performance. For Bank of America, it indicates lower default rates in mortgages, auto loans, and credit cards. As a result, the bank can keep loan loss provisions contained and maintain healthy profitability in its retail banking segment.

Global Trade and Regulatory Shifts Influence Bank Positioning

The newly signed GENIUS Act requires stablecoins to be fully backed by US dollars or Treasury bills. This is expected to increase demand for short-term government securities and drive more liquidity into regulated banks. Bank of America may benefit from increased deposit flows and enhanced short-term funding access.

President Trump’s new trade deals with Japan and the EU include a 15% tariff on most goods, excluding steel and aluminium, which face a 50% rate. These tariffs add global uncertainty and may prompt looser monetary policy abroad. As capital flows into US assets, Bank of America could see increased demand in institutional banking and capital markets.

Technical Strength: Volatility, Patterns, and Long-Term Bullish Structure

Broadening Wedge and Ascending Channel Confirm Long-Term Growth

The long-term price action for Bank of America shows strong volatility. This is clearly visible on the monthly chart, which reveals an ascending broadening wedge pattern forming from the 2011 low of $3.89 to the 2025 high of $49.31.

The volatility reflects the challenges the bank has faced over the years. Despite these headwinds, Bank of America has continued to grow steadily. The wedge pattern indicates that the stock has been trading within a wide range.

The lower boundary lies between $26 and $28, while the upper boundary extends to the $50–$60 range. Recently, the stock reached a high of $49.31 in July 2025 but has since begun to decline.

To understand the broader outlook for Bank of America, the logarithmic chart reveals a clear long-term uptrend in the stock price. This uptrend has followed an ascending channel pattern since the 2011 low. Each major low along this channel has triggered a strong buy signal, leading to significant upward moves.

The key buy signals appeared at $3.89 in 2011, $8.92 in 2016, and $15.76 in 2020. Another strong signal emerged at $23.86 in 2023, which resulted in a notable rally. Currently, the stock is showing bullish price action, suggesting that the upward momentum is likely to continue.

Falling Wedge Breakout and Buy Zones Support $60 Target

To further understand the bullish price action in Bank of America, the stock shows the formation of a falling wedge pattern from the 2021 high to the 2023 low. This bullish pattern broke to the upside in 2023, leading to a sharp rally that produced a record high of $49.31. The initial breakout met its measured target at $45.76.

Following the breakout, the stock formed another wedge pattern, within which it is currently trading. The development of a new wedge pattern after a falling wedge breakout signals continued bullish momentum. This suggests the stock is likely to resume its upward move once the current consolidation phase ends.

The $35 level remains a key long-term buying zone for investors, with the $60 region serving as the long-term target. Any pullback toward the $40 to $35 range should be viewed as a buying opportunity for long-term investors.

Short-Term Reversal Patterns Point to Bullish Continuation

The short-term outlook for Bank of America shows the formation of an inverted head and shoulders pattern, with the stock recently reaching strong resistance at $50. However, it failed to break above this level and began a corrective move.

Despite the pullback, the stock maintains a bullish structure, supported by the strong reversal in April 2025 from the low of $33.07. This reversal, followed by the formation of the inverted head and shoulders, reinforces the bullish momentum in price action.

If the stock declines toward the $40 to $35 region, it will likely find strong buying support. A sustained rebound from that zone could lead to a breakout above $50 and potentially push the stock toward the $60 region in the coming months.

Final Thoughts: Fundamentals and Technicals Support Long-Term Buy

Bank of America remains well-positioned despite a complex macroeconomic landscape. Stable interest rates, loose financial conditions, and strong deposit growth continue to support earnings. The bank benefits from rising net interest income, healthy credit quality, and solid consumer demand. Its balance sheet remains strong, with ample liquidity and conservative risk management. Recent regulatory developments and global capital flows further enhance funding flexibility and institutional growth potential.

From a technical perspective, the price action shows a long-term uptrend supported by multiple bullish patterns. The stock continues to attract buyers at the $35 to $40 range. Despite short-term resistance near $50, the broader trend favours a move toward $60. Therefore, investors can consider buying the stock on pullbacks to target $60 and higher.