All eyes will be on bank stocks and the exchange-traded funds that track them.
The stress test showed that numerous banks involved have not only built up adequate capital buffers but also improved risk management, the Fed said late on Wednesday.
"For some time, we have retained a significant amount of capital in excess of what is needed to prudently operate and invest in the firm". Bank of America and Morgan Stanley hiked their quarterly dividends to 12 cents a share and 25 cents a share, respectively.
The results could potentially give further momentum for the White House to loosen financial rules in the future, which in turn caused shares in the big banks to rise as much as 2 percent on Thursday.
Banks do not yet merit an overweight position, but we are becoming more bullish on the group and expect their downward trend to turn around in the second half of 2017.
"This should be a red flag", said Neil Barofsky, partner at Jenner & Block, a former inspector general of the $700 billion Troubled Asset Relief Program, which was enacted at the height of the 2008 crisis. The firm said on Wednesday that it would increase its dividend and authorize up to $15.6bn in share buybacks in coming months. The board also approved an estimated $900 million in repurchases to offset shares awarded under equity-based compensation plans during the same period. At this quarterly dividend rate, the annual dividend will be equivalent to $1.20 per common share.
The U.S. Commerce Department's final estimate of first-quarter GDP is expected to show the economy growing at a 1.2 percent pace.
President Donald Trump Meet up Narendra Modi
But Indian officials have downplayed those differences, insisting that Modi was alert to Trump's concerns over jobs and trade. Trump, who has made jobs his first priority, also noted pointedly India's shopping for a large consignment of Boeing jets.
"At a high level we are seeing the health of the banking system here and it's been a process to return incremental capital", said Devin Ryan, analyst at JMP Securities.
The Comprehensive Capital Analysis and Review, in its seventh year, evaluates the capital planning processes and capital adequacy of the largest USA -based bank holding companies, including the firms' planned capital actions that also include potential major acquisitions.
If Bank of America raises its dividend above 44 cents, Warren Buffett's Berkshire Hathaway could become the bank's largest shareholder.
Wells Fargo "s capital return plan also received the Fed's approval, despite some expectations that a consumer sales scandal might negatively affect the policymakers" decision.
Altogether, banks that went through the tests will be able to pay out 100 per cent of their projected net income over the next four quarters, compared with 65 percent after last year's results, a senior Fed official said. Our plans also include an increase in our common share repurchase authorization. One bank, however-Capital One Financial Corporation-will be required to resubmit its capital plan by the end of 2017, although they were still given a pass.
The Fed's most extreme hypothetical scenario in this year's tests envisions the USA economy falling into a deep recession causing the stock market to plunge about 40 percent.