JPMorgan shares dip premarket after Dimon flags 2026 expense rise

JPMorgan Chase & Co. shares turned lower in pre-market trading Tuesday after Chief Executive Officer Jamie Dimon said the bank's expenses may increase this year, adding a fresh headwind to the largest US lender by assets.

"Expenses may increase this year," Dimon said in a brief statement, without providing specific dollar amounts or detailing which cost categories were driving the anticipated rise. The comment sent JPMorgan's stock lower in pre-market trading, reversing gains from earlier in the session when broader equity markets rallied on AI-driven momentum and easing geopolitical tensions.

The expense warning comes at a critical juncture for JPMorgan, which has benefited from elevated net interest income during the Federal Reserve's rate-hiking cycle but now faces pressure as the central bank signals potential rate cuts ahead. Each 25-basis-point reduction in the fed funds rate reduces JPMorgan's net interest income by roughly $600 million annually, according to the bank's investor disclosures. The 10-year Treasury yield fell 7 basis points to 4.47% Tuesday, reflecting growing expectations for monetary easing.

JPMorgan's expense base has been a focal point for investors since the bank reported first-quarter results last month. The bank posted net interest income of $23.2 billion in Q1 2026, beating consensus estimates, but operating expenses rose 4% year-over-year to $19.8 billion, driven by technology investments and branch expansion. The bank's efficiency ratio — a key measure of costs as a percentage of revenue — stood at 58%, above the 55% target management had outlined for 2026.

The broader banking sector faces similar cost pressures as lenders compete for talent in technology and AI roles while maintaining legacy branch networks. JPMorgan's CET1 ratio of 14.8% remains well above regulatory minimums, giving it flexibility to absorb higher expenses, but Dimon's warning suggests the bank may not achieve the operating leverage investors had priced in.

The stock's pre-market decline contrasts with the broader market's strength Tuesday. The S&P 500 rose 0.7% to a fresh record close, while the Nasdaq Composite gained 1.2% to hit a new high, led by a 20% surge in Micron Technology Inc. The Dow Jones Industrial Average fell 0.2%, weighed by financial sector weakness.

Investors will scrutinize JPMorgan's investor day later this quarter for more detail on expense guidance and the bank's outlook for net interest income in a falling-rate environment. The Fed's next policy decision is scheduled for June 17-18, with CME FedWatch data showing an 8.5% probability of a rate hike in July, up from 0.9% a month ago.

This article is for informational purposes only and does not constitute investment advice.