Banks generally do well in times of high inflation. We believe we can think this way. Wells Fargo U.S. Bancorp, (USB), and JPMorgan (NYSE:) are in a good position to benefit from the possible tightening of monetary policy. We think that JPMorgan’s (JPMorgan) and Bank of America’s (BAC) are best to avoid now due to their poor near-term prospects for growth. Continue reading. The Consumer Price Index rose 6.2% to October, compared with a year ago. This is the largest jump in over 30 years. Although soaring inflation is not expected to have an equal impact on every sector, it will likely benefit some.

Banks are rate sensitive and will benefit from tighter monetary policies by the Fed to combat inflation. The income from bank assets, like loans and bonds, rises faster than those of their liabilities such as deposits. Banks could see an increase in interest rates from the Fed, which will help them improve their profit margins. Senior bankers and experts in the industry welcomed Jerome Powell, Federal Reserve Chair,’s second term nomination. This helped U.S. banks stock rise.

Given this backdrop, we think it could be wise to bet on fundamentally strong bank stocks Wells Fargo & Company (WFC) and U.S. Bancorp (USB). However, JPMorgan Chase & Co. (NYSE:) and Bank of America Corporation (NYSE:) do not look well-positioned to see their shares soar in the near term. Avoid these stocks now.

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