Finance

Homeownership is synonymous with the American dream for a large share of U.S. adults.
Renting may be a better idea for prospective homebuyers.
That’s due to flexibility of rentals, and a “nuisance” factor and hidden costs associated with homebuying, financial advisors said.

Svetikd | E+ | Getty Images

1. You’re unsure about the long-term

Prospective homebuyers should have conviction about where they want to live, said Kamila Elliott, a CFP based in Atlanta and a member of CNBC’s Advisor Council.

For example, would they enjoy living for several years in a particular city or suburb, or in a specific neighborhood? If they had relocated for a job, would they still want to live there if they lost that job?  
If the answer to any of those questions is no, renting is likely best, said Elliott, co-founder and CEO of Collective Wealth Partners.
“If you can’t commit to being there [at least] three years, don’t buy,” said Elliott.

Flexibility is a big plus for renters, Boudreaux said.
For example, if you move to an unfamiliar place, “renting can be a nice pathway,” he noted, in order to avoid buying and then discovering you don’t like the location.
The benefits can be both psychological and financial.
Home prices can be volatile, making it more likely a buyer wouldn’t make a profit if selling after just a short period of ownership, Elliott said.
Upfront transaction costs like realtor’s fees are also generally “very expensive,” making it harder to break even on a short-term home purchase, Boudreaux said.

2. You don’t like the ‘nuisance’ factor

Guido Mieth | Stone | Getty Images

There’s also a certain lifestyle benefit to renting instead of buying, advisors said.
Renters don’t have to deal with the “nuisance factor” of scheduling appointments with landscapers and exterminators or paying for home repairs, Elliott said. That’s typically a landlord’s responsibility.
“You don’t have to worry about fixing the dishwasher, garage door, or HVAC unit,” Elliott said.
Depending on the building, renters may feel safer if there are additional security cameras or a doorman, or get convenience and social benefits if there are amenities like a gym or pool, she added.
Conversely, a house may be the right lifestyle choice for someone who wants a big yard with a nice garden and room for a dog to run around, Boudreaux said.

3. Benefits of ownership are ‘vastly overstated’

Richard Newstead | Moment | Getty Images

The financial benefits of homeownership are “vastly overstated,” Boudreaux said.
“Buying a home because you feel it’s the thing you should do can be [financially] dangerous” and lead to regret, he added.
For one, a financial assessment of affordability is incomplete if consumers only compare monthly rent and mortgage costs. The true cost of homeownership also includes costs for utilities, home improvements and maintenance, property taxes and homeowners insurance, advisors said.
The average homeowner paid more than $15,000 a year in addition to their mortgage to cover these costs in 2022, according to Clever Real Estate.
Secondly, a tax deduction for mortgage interest isn’t as valuable as it once was, Boudreaux added.
A 2017 tax law passed during the Trump administration reduced the mortgage interest threshold; married couples can claim a tax deduction on the first $750,000 of their mortgage, down from $1 million.

I don’t think it should be an automatic for everyone. You could live your whole financial life renting and be very happy.

Jude Boudreaux
senior financial planner with The Planning Center

In a general sense, it’s also more difficult to get the financial benefits of a tax deduction. The law doubled the standard deduction (it’s $27,700 in 2023 for married couples) and capped a deduction for state and local taxes at $10,000.
Taken together, a tax break for mortgage interest “is not the benefit it used to be,” Boudreaux said.
Of course, owning a home is often seen as an investment, as well as securing a place to live.
Homeownership “allows families to build wealth and serves as a measure of financial security,” according to a 2018 paper by Laurie Goodman of the Urban Institute and Christopher Mayer of Columbia University. Home equity can play an important role in retirement savings, for example, if retirees are able to tap that wealth, they wrote.  
But there are “substantial variations” in homeowner experience based on factors like purchase timing, holding period and location, they said.

For example, wealth-building depends on one’s ability to hold on to a home during downturns; lower-income and minority borrowers are less likely to do so, and thus benefit less from homeownership, Goodman and Mayer wrote. Additionally, homeowner returns “have been less favorable” in areas like Cleveland and Chicago relative to other metro areas like Los Angeles, Dallas and New York.
Historically, residential real estate returns and those of stocks have been “very similar and high,” according to a paper published by the Federal Reserve Bank of San Francisco, which examined global investments from 1870 to 2015.  
But in the U.S., investors have gotten a better net return on stocks relative to housing during that time: 8.3% vs. 6% a year, on average, after accounting for inflation, according to the paper. More

A Joby Aviation Electric Vertical Take-Off and Landing (eVTOL) aircraft outside the New York Stock Exchange (NYSE) during the company’s initial public offering in New York, U.S., on Aug. 11, 2021.
Michael Nagle | Bloomberg | Getty Images

Check out the companies making the biggest moves in premarket trading:
Joby Aviation — Joby shares gained another 17% premarket. The aviation company announced a $100 million equity investment from South Korea’s SK Telecom, expanding an existing partnership. On Wednesday, shares surged 40% after the company said it received a permit to begin flight testing its first electric vehicle takeoff and landing vehicle (eVTOL).

Micron Technology — Shares added 2.3% after latest quarter revenue topped analyst estimates postmarket Wednesday. Micron revenue of $3.75 billion beat the $3.65 billion expected by analysts, per Refinitiv. Micron said it believes the memory chip industry has passed its trough in revenue and now expects profit margins to improve.
Wells Fargo, JPMorgan Chase, Bank of America — The banks moved higher after passing the Federal Reserve’s annual stress test Wednesday. Wells Fargo and Bank of America gained nearly 2%, while JPMorgan rose 1.6%.
Charles Schwab — Shares jumped 2.7% following the Fed’s stress tests. The brokerage firm had the lowest rate of total loan losses, at 1.3%.
Citizens Financial — The regional bank shed 1.6% premarket. JPMorgan downgraded the Providence, Rhode Island-based lender after the Fed stress tests to neutral from overweight, citing increased capital requirements that will put further pressure on profitability.
Freyr Battery — Shares popped nearly 11% after being upgraded by Morgan Stanley to overweight from equal weight. Analyst Adam Jonas said he believes the company can show “meaningful progress on commercial milestones.” His $13 price target suggests a 72% rally from Wednesday’s close.

Occidental Petroleum — Occidental Petroleum rose more than 1% after Berkshire Hathaway on Wednesday said it bought more shares of the oil giant. Between June 26 and June 28, the Warren Buffett conglomerate bought a total of 2.1 million shares, according to a regulatory filing, brining its position to 25%.
Overstock — Shares of the retailer rose 9% premarket after Overstock closed its deal to buy the Bed Bath & Beyond brand out of bankruptcy. Overstock will shift to using the Bed Bath & Beyond name in the coming weeks.
Virgin Galactic — Shares of Richard Branson’s spaceflight company climbed more than 1% premarket. Virgin Galactic is set to launch its first commercial spaceflight later Thursday.
— CNBC’s Tanaya Macheel, Jesse Pound, Sarah Min, Michael Bloom and Brian Evans contributed reporting. More

A few months ago the China Select Committee in America’s House of Representatives took part in a war game, complete with tabletop maps and blue and red counters. It simulated a Chinese invasion of Taiwan, and revealed familiar weaknesses in America’s position: its bases need strengthening and it soon ran out of precision munitions. Yet the game also highlighted a less obvious risk: America’s economic weapons went off half-cocked.In the simulation, the Blue Team (ie, the Americans) had to cobble together sanctions on the hoof. They punished a few Chinese state-owned banks, putting only “moderate” pressure on their adversary. The conclusion was that the best time to plan sanctions is before they are needed.Until recently, such talk might have seemed alarmist. But a Taiwan crisis is now all too thinkable. For the past eight months, Charlie Vest and Agatha Kratz of the Rhodium Group, a research firm, have met officials, analysts and businessfolk in Berlin, Brussels, London and Washington to discuss sanctions. They found that the topic is not only an American obsession. Sanctions talk can, however, lack detail. “There was a lot of discussion about this, but not really a clear sense of the magnitude of economic assets and flows that would be put at risk,” says Mr Vest. In a new report with the Atlantic Council, a think-tank, he and Ms Kratz try to remedy this. They consider sanctions that might be imposed in a Taiwan crisis short of war, such as a blockade of the island. They put numbers on several scenarios, including sanctions on individuals, industries and financial institutions. The most sweeping measures resemble the punishment inflicted on Russia after its invasion of Ukraine. The g7, acting together, would block dealings with China’s central bank and its “big four” state-owned commercial banks.These measures would freeze about 95% of China’s foreign-exchange reserves (the remainder is mostly in gold). It would also cut off China’s banks from most of their foreign assets (worth $586bn). The g7 would have to forfeit the modest reserves (of $52bn) they hold in yuan. And g7 banks would have to forgo claims, including loans, deposits and bonds, on Chinese banks, which amount to less than $126bn, or 1% of their total cross-border claims.When foreigners buy goods, services or assets from Chinese residents, payments pass through local banks. The same is true when the transactions flow the other way. Mr Vest and Ms Kratz guess that the big four banks handle almost 40% of this business, a percentage roughly in line with their share of Chinese banks’ overseas assets. Sanctions on such institutions could jeopardise about $127bn of annual foreign-direct investment, another $108bn of “portfolio investment” (purchases of stocks and bonds) and $148bn in repatriated profits from investments in China. Dwarfing these costs would be the hit to trade in goods and services. The report estimates the big-four banks settle about $2.6trn-worth per year.Yet sanctions would not have an “immediately crippling effect”, Mr Vest warns. China would impose tight controls on the outflow of capital and let the yuan fall. The report assumes the g7 would allow other banks to fill the gap left by the big four. The resumption of exports would bring in the dollars to stabilise China’s economy. Rather than disrupting trade indirectly, through financial sanctions, the g7 could restrict it directly, by banning exports or imports. The report considers sanctions on a single industry, such as aerospace, as well as sweeping ones aimed at chemicals, metals, electronics, aviation and transport equipment. Such measures could put at risk 13m Chinese jobs across the industries, the authors reckon. It could also endanger 1.3m jobs in the g7 firms that supply them. All told, broad financial sanctions are disruptive enough that it is hard to imagine their use in any scenario short of war. But if a war did break out, even severe sanctions might do little. Armed conflict would, after all, impede vital shipping lanes, break the Taiwan-dominated supply chain for high-end chips and spread panic. “In effect, the military conflict would itself act as the sanction,” as Gerard DiPippo and Jude Blanchette of the Centre for Strategic and International Studies, another think-tank, have argued. The economic weapons discovered by the g7 after Russia’s invasion of Ukraine are not just double-edged. They may also be redundant in the only scenario in which they are feasible. ■For more expert analysis of the biggest stories in economics, finance and markets, sign up to Money Talks, our weekly subscriber-only newsletter. More

On june 26th the Captain Paris, a Greek-owned vessel transporting 730,000 barrels of diesel from Russia, reached the Suez canal. The crew are familiar with the passage, through which they usually ferry oil from the Gulf or India to Europe or Africa. This time, though, the ship is going the other way: it is due to unload its cargo in the United Arab Emirates (uae).In February, when the EU banned imports of refined oil from Russia, many doubted the country could redirect its vast exports of diesel, which amounted to 950,000 barrels a day (b/d) last year, and made up most of its $65bn-worth of petroleum-product sales. At the end of last year the eu still bought two-thirds of the country’s exports. China and India, which fast replaced Europe when it boycotted Russian crude, were uninterested. The rest of the market was fragmented. Yet as the Captain Paris’s odyssey suggests, trade has been rerouted. New buyers have already emerged—as have methods for minting money by exploiting sanctions. Indeed, take a glance at aggregate trade figures and you would think Europe’s ban had never been imposed. In March Russian exports of diesel reached a record 1.3m b/d. Although they have fallen below 900,000 b/d since May, their level remains on par with recent years, and the drop is largely a result of seasonal refinery maintenance. The countries enabling such a feat fall into two camps. First are those that buy more diesel from Russia, at a discount, to replace supply from elsewhere. They include South American countries, led by Brazil. Having bought nothing from Russia in January, Brazil received 152,000 b/d in June, equivalent to 60% of its total diesel imports. North African countries, such as Algeria, Egypt and Morocco, also smell a bargain. In recent months Russia even exported refined oil to North Korea, the first such shipments reported since 2020. These new buyers export little themselves.The second category comprises countries that have become greedy for Russian products despite having refineries of their own. Chief among them is Turkey. It is now buying twice as much diesel from Russia as in January, but its own exports have grown more rapidly still. It is unlikely Turkey is re-exporting much of the stuff under a new label. Instead, it is probably taking advantage of its proximity to Europe to “triangulate” Russian flows, using cheap imports to meet its domestic needs while selling its pricier production to the bloc. The Gulf states are making a similar trade. Saudi Arabia did not import diesel from Russia for years; since April, its purchases have passed 150,000 b/d. It is not unusual for Saudi imports to rise before the summer, when power demand for cooling soars. This year, however, the country’s exports of diesel have risen in tandem—by around 120,000 b/d between April and June compared with the same period in recent years. A lot of that is going to Europe and, increasingly, to Asia.This flourishing trade implies that—in addition to new customers—Russia’s export machine has enough ships to serve them. This was far from a given. “Clean” products like diesel cannot be carried on regular tankers, where traces of crude or heavier products may sully them. The tiny global fleet of diesel tankers could have been stretched when Russia’s barrels started making longer journeys. February’s sanctions threatened to make the problem worse. Europe bars its dominant shippers, traders and insurers from facilitating Russian sales, unless the oil is sold below a price set by the g7 at $100 a barrel for premium products. Compliance headaches, plus the PR risk of dealing with Russia, have kept many Western firms at bay. But not all. Gunvor and Vitol, two giant traders in Geneva, were still ranked among the top ten buyers of Russian oil products in the first four months of the year, according to reports citing customs data (both firms have said they comply with relevant regulations). The rest include the trading arms of Russian energy firms, as well as a mixture of obscure merchants, often set up after the war started, in Hong Kong, Singapore or the UAE. These do not seem to be short of barges to carry their wares. The Captain Paris, for example, is chartered by Bellatrix, a once-unknown trader that controls 36 vessels, most of them carrying clean products from Russia. Creative techniques are being employed, too. Ship-to-ship transfers involving Russian cargo, notably near Greece and Malta, have soared since last year, suggesting attempts to circumvent restrictions. The EU admitted as much on June 21st, when it said that it would ban tankers suspected of dodgy transfers from docking at its ports. Some vessels also use military-grade equipment to send fake location signals. It helps that importers wary of legal troubles are often happy to buy Russian fuel via indirect routes. Since February Russia has sent record volumes of naphtha, a clean product used to make plastics, to Malaysia and Singapore, where it is stored in vast tanks. It is then shipped piecemeal to customers across Asia, who claim to believe it is a local product. A refined state of affairs In recent years, Russian exports have made up around 15% of global diesel trade. Their resilience in the face of sanctions will probably lead to a glut over the rest of this year. Prices soared in 2022 when the risk of disruptions coincided with a post-covid rebound in demand. Yet supply shocks are now dissipating at the same time as Gulf states are adding refinery capacity and slowing economic growth is dampening Western consumption. The cost of a barge of diesel delivered in Rotterdam has fallen by a quarter in a year. Refining margins are a third of what they were. This will hurt Europe’s and rich Asia’s ailing refiners, which are already being pushed out of the market by cheap products. At best, they may cut refinery runs; at worst, they will have to slash capacity. As with crude, sanctions are bringing easy bucks to those who do not observe them. ■For more expert analysis of the biggest stories in economics, finance and markets, sign up to Money Talks, our weekly subscriber-only newsletter. More

Negotiations over international debt are often headspinning. To reduce the debts of a country that can’t pay the bills, it takes referees from the imf, teams of lawyers and a contest between a country and its creditors. Everyone wants a deal, but no one is keen on taking losses. Just as creditors agree on who should club together, they start arguing about the terms. The chaos can go on endlessly. Countries, unlike bankrupt companies, are never liquidated. “It was a zig-zag, sideways, forwards, backwards, down, up, but we kept our eyes on the ball,” reported Haikande Hichilema, Zambia’s president, after his country finally managed to strike a deal. On June 22nd, at a summit in Paris, Zambia’s rich-country creditors announced said deal: they had agreed to push back repayments on their lending by two decades to 2043. The wriggle room created by the extension, as well as accompanying interest cuts, could make Zambia’s debt burden considerably lighter—a surprise, since the biggest of the country’s creditors is China, which holds $4.2bn out of $6.3bn of its external debt to official creditors, and has spent the past few years obstructing an already chaotic process. Dragged to the negotiating table after its two-decade lending drive went awry, Beijing’s reluctance to write down loans and class those from state-owned banks as official has brought restructurings across the world to a standstill. Zambia had been stuck since November 2020, when it ran out of dollars to pay its foreign bills (and its currency reserves dipped below $1bn, or just over two months of imports). It has since run up $1.8bn in unpaid interest. Thus international financiers were forced to get creative. Before the deal was announced, the amount Zambia owed official creditors fell from $8bn to $6.3bn. The borrowing was reclassified as having been lent by the private sector, so it could be left out of this part of the process, even though in reality it came from one of China’s state-run banks and was guaranteed by Sinosure, a state-run insurer. China still point-blank refuses to cut the face value of its loans. The breakthrough also relied on unusual stipulations. Zambia will pay 1% annual interest on borrowing until 2025, a big discount. At this point, if Zambia’s economy is judged by the imf to be picking up, which is likely, the rate will rise to close to 4%, wiping out lots of the country’s debt relief. In this scenario, creditors, including Beijing, will earn about the same as they would have by putting the cash in ten-year Treasuries. Oddly the deal gives Zambia better terms the worse the country’s economic performance, creating moral hazard. Zambia’s is the latest of several strange restructurings. In May Suriname, which owes China $155m (or 6% of its external debt) and had been waiting three years for a deal, bucked a trend. It restructured lending from the private sector before it had reached an agreement with China, an official creditor. Last year Chad also managed to strike a deal, but only by rescheduling rather than lowering payments. Under the agreement, the country can also pay its interest bills using commodities; additional help is again conditional on economic indicators (this time the price of oil).In richer countries, the stakes are higher. The imf’s plan for Sri Lanka, which owes China $7.4bn (or 20% of its external debt), means its debt-to-gdp ratio will remain above 100% until at least 2026. This will make borrowing from markets even more expensive. Some observers worry that the imf’s analysis of how much debt a country can handle is becoming too optimistic. Others think restructurings that reduce debts by pushing their repayment out, which look set to be the status quo until China changes tack, will transform insolvent countries into permanently illiquid ones, meaning they swing between endless short-term crises. For now, that does not bother Mr Hichilema. He needs to tackle the next stage in his country’s restructuring deal: private-sector creditors. He must decide whether to emphasise the generous terms he has won from official donors, which stay if the economy struggles, or reassure bondholders that he is already working to ensure a world in which the terms become stingier, and his country is on the up. ■For more expert analysis of the biggest stories in economics, finance and markets, sign up to Money Talks, our weekly subscriber-only newsletter. More

Meng Wanzhou was speaking at a keynote session at the Shanghai Mobile World Congress on Wednesday. She also spoke broadly about the benefits of 5G to consumption and the economy.
Huawei has sought to sell cloud services to specific industries such as mining and finance.

Huawei Technologies Chief Financial Officer Meng Wanzhou reacts as she leaves her home to attend a court hearing in Vancouver, Canada, August 10, 2021.
Jennifer Gauthier | Reuters

SHANGHAI — Huawei’s Chief Financial Officer Meng Wanzhou said Wednesday that applying 5G technology to business was more difficult than she had expected.
One of the expectations for 5G connectivity is that beyond faster mobile phone connections for individual consumers, the technology can better enable self-driving vehicles and factory automation.

Meng said the challenges of bringing 5G to business was underestimated and that it’s completely different than previous 2G, 3G or 4G generations. She said only when 5G becomes part of the ecosystem can it be possible to realize operations at scale.
Meng was speaking at a keynote session at the Shanghai Mobile World Congress on Wednesday, where she spoke broadly about the benefits of 5G to consumption and the economy.
The Chinese smartphone maker has sought to sell cloud services to specific industries such as mining and finance.

The company broke out figures for its cloud computing business for the first time in 2022, and said revenue for the unit came in at 45.3 billion Chinese yuan ($6.25 billion) last year.
“When you compare MWC Shanghai and MWC Barcelona [earlier this year], one interesting aspect is you find a lot of the case studies are universal, global,” said Winston Ma, author of “The Digital War: How China’s Tech Power Shapes the Future of AI, Blockchain and Cyberspace.”

Speaking on the sidelines of Shanghai MWC, he said Chinese companies’ need to compete could spur greater adoption of 5G.
“So I think the Chinese companies are probably more ready, are more willing to test new 5G applications,” said Ma, who is also an adjunct professor of law at New York University.
“But of course there will be barriers for whatever industry, especially for the traditional industries, they have their existing ecosystem.”

Bans on Huawei 5G

Last year, Huawei saw its biggest annual decline in profit as U.S. sanctions hit its business and China’s Covid-19 controls weighed on the local economy.
In May 2019, the Trump administration put Huawei on a blacklist that restricted U.S. companies from selling technology to the Chinese company due to national security concerns. Huawei has denied it poses such a threat.
The U.S., U.K. and Australia, have also banned Huawei from operating in their 5G networks. Earlier this month, a top EU official called for more members of the bloc to do so. Germany is among the countries that have not yet restricted Huawei from its local 5G network.
Meng, the daughter of Huawei’s founder, returned to China in 2021 — after about nearly three years of being detained in Canada at the request of the U.S. In addition to being Huawei’s CFO, she is also deputy chairwoman of Huawei’s board and rotating chairwoman.
— CNBC’s Arjun Kharpal and Ryan Browne contributed to this report.
Correction: This story has been updated to show that Huawei saw its biggest annual decline in profit last year. More

All 23 of the U.S. banks included in the Federal Reserve’s annual stress test weathered a severe recession scenario while continuing to lend to consumers and corporations.
The rate of total loan losses varied considerably across the banks, from a low of 1.3% at Charles Schwab to 14.7% at Capital One; credit cards were easily the most problematic loan product.
Banks including JPMorgan Chase and Wells Fargo are expected to disclose updated plans for buybacks and dividends Friday after the close of regular trading.

Michael Barr, Vice Chair for Supervision at the Federal Reserve, testifies about recent bank failures during a US Senate Committee on Banking, House and Urban Affairs hearing on Capitol Hill in Washington, DC, May 18, 2023.
Saul Loeb | AFP | Getty Images

All 23 of the U.S. banks included in the Federal Reserve’s annual stress test weathered a severe recession scenario while continuing to lend to consumers and corporations, the regulator said Wednesday.
The banks were able to maintain minimum capital levels, despite $541 billion in projected losses for the group, while continuing to provide credit to the economy in the hypothetical recession, the Fed said in a release.

Begun in the aftermath of the 2008 financial crisis, which was caused in part by irresponsible banks, the Fed’s annual stress test dictates how much capital the industry can return to shareholders via buybacks and dividends. In this year’s exam, the banks underwent a “severe global recession” with unemployment surging to 10%, a 40% decline in commercial real estate values and a 38% drop in housing prices.
Banks are the focus of heightened scrutiny in the weeks following the collapse of three midsized banks earlier this year. But smaller banks avoid the Fed’s test entirely. The test examines giants including JPMorgan Chase and Wells Fargo, international banks with large U.S. operations, and the biggest regional players including PNC and Truist.
As a result, clearing the stress test hurdle isn’t the “all clear” signal its been in previous years. Still expected in coming months are increased regulations on regional banks because of the recent failures, as well as tighter international standards likely to boost capital requirements for the country’s largest banks.  
“Today’s results confirm that the banking system remains strong and resilient,” Michael Barr, vice chair for supervision at the Fed, said in the release. “At the same time, this stress test is only one way to measure that strength. We should remain humble about how risks can arise and continue our work to ensure that banks are resilient to a range of economic scenarios, market shocks, and other stresses.”

Goldman’s credit card losses

Losses on loans made up 78% of the $541 billion in projected losses, with most of the rest coming from trading losses at Wall Street firms, the Fed said. The rate of total loan losses varied considerably across the banks, from a low of 1.3% at Charles Schwab to 14.7% at Capital One.

Credit cards were easily the most problematic loan product in the exam. The average loss rate for cards in the group was 17.4%; the next-worst average loss rate was for commercial real estate loans at 8.8%.
Among card lenders, Goldman Sachs’ portfolio posted a nearly 25% loss rate in the hypothetical downturn — the highest for any single loan category across the 23 banks— followed by Capital One’s 22% rate. Mounting losses in Goldman’s consumer division in recent years, driven by provisioning for credit-card loans, forced CEO David Solomon to pivot away from his retail banking strategy.

Regional banks pinched?

The group saw their total capital levels drop from 12.4% to 10.1% during the hypothetical recession. But that average obscured larger hits to capital — which provides a cushion for loan losses — seen at banks that have greater exposure to commercial real estate and credit-card loans.
Regional banks including U.S. Bank, Truist, Citizens, M&T and card-centric Capital One had the lowest stressed capital levels in the exam, hovering between 6% and 8%. While still above current standards, those relatively low levels could be a factor if coming regulation forces the industry to hold higher levels of capital.
Big banks generally performed better than regional and card-centric firms, Jefferies analyst Ken Usdin wrote Wednesday in a research note. Capital One, Citigroup, Citizens and Truist could see the biggest increases in required capital buffers after the exam, he wrote.
Banks are expected to disclose updated plans for buybacks and dividends Friday after the close of regular trading. Given uncertainties about upcoming regulation and the risks of an actual recession arriving in the next year, analysts have said banks are likely to be relatively conservative with their capital plans. More

A banner for the online image board Pinterest Inc. hangs from the New York Stock Exchange on the morning Pinterest made its initial public offering, April 18, 2019.
Spencer Platt | Getty Images News | Getty Images

Check out the companies making the biggest moves midday.
Pinterest — Shares climbed 6.59%. Wells Fargo upgraded Pinterest to overweight due to an Amazon partnership expected to take hold later this year and optimism that Pinterest can continue to boost user engagement.

Cruise stocks — Carnival popped 8.81%, Norwegian Cruise Line gained 7.55% and Royal Caribbean added 1.68%, extending gains from Tuesday after Carnival reported a smaller-than-expected loss for its second quarter and issued strong guidance. The sector has been on a tear this year as it recovers from the Covid-19 pandemic.
General Mills — Shares tumbled 5.17% after the maker of Betty Crocker mixes and Cheerios cereal turned in a mixed earnings report for its fiscal fourth quarter. The company exceeded Wall Street expectations on earnings, posting $1.12 in adjusted earnings per share against a consensus estimate of $1.07 from analysts polled by Refinitiv. But $5.03 billion in revenue missed analysts’ forecast of $5.17 billion.
Chip stocks — Shares of Nvidia slipped 1.81% and Advanced Micro Devices was down 0.2%, paring earlier losses, following a Wall Street Journal report that the U.S. is weighing new restrictions on artificial intelligence chip stocks sold to China.
Netflix — The streaming giant jumped 3.06% after Oppenheimer raised its price target to $500 per share from $450. The Wall Street firm said it anticipated more subscribers and the potential discontinuation of its lowest-priced, ad-free plan, which is being tested in Canada.
Joby Aviation — Shares soared 40.22% after the company announced it received a permit to begin flight testing its first electric vertical takeoff and landing vehicle (eVTOL).

AeroVironment — Shares added 4.86% after the military drone maker reported revenue of $186 million after the market close Tuesday, topping analysts’ projection of $164 million, according to consensus estimates from Refinitiv. AeroVironment also said it anticipates full-year revenue of $630 million to $660 million, beating the $600 million expected by analysts.
ZoomInfo — The software stock rose 6.09% after Needham initiated coverage of ZoomInfo with a buy rating. Needham said in a note to clients that ZoomInfo has “best in class unit economics.” ZoomInfo also received positive coverage from Morgan Stanley, which reiterated an overweight rating on the stock.
Snowflake — Shares added 3.86% after the data cloud company reiterated its full-year guidance during an investor day Tuesday. Goldman Sachs reiterated its buy rating on Snowflake after the event and Morgan Stanley maintained an overweight recommendation.
Circor International — The maker of flow control products for industrial and aerospace and defense markets users rallied 4.25% following a Reuters report that private equity firm Arcline has offered $57 per share, topping a rival bid from KKR.
First Citizens BancShares — The regional bank gained 0.4%. Atlantic Equities initiated coverage of the North Carolina bank Wednesday with an overweight rating and $1,775 per share price target, which suggests nearly 50% upside from Tuesday’s close.
— CNBC’s Alex Harring, Brian Evans, Jesse Pound and Michael Bloom contributed reporting. More