(Bloomberg) — US bank stocks closed at their highest level in three years as investors continued to pile into the group amid speculation they will begin to boost buybacks and dividends after the lenders comfortably cleared the Federal Reserve\u2019s stress test last week.<\/p>\n
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The KBW Bank Index rose 1.5% Tuesday, closing at the highest level since February 2022 and under 4% from its early 2022 all-time high. The gauge posted a ninth consecutive day of gains, matching its longest winning streak on record. All but two of the gauge\u2019s 24 members were higher, led by Western Alliance Bancorp, East West Bancorp Inc. and Zions Bancorp NA.<\/p>\n
Tuesday\u2019s rally coincided with a breather for the broader market \u2014 which had closed at consecutive records \u2014 as investors rotated out of technology shares and into relatively safer pockets of the market. A basket of value stocks outperformed a basket of momentum stocks by nearly 2 percentage points, according to data compiled by Bloomberg.<\/p>\n
Banks headed into the week on strong footing after all lenders subjected to the Fed\u2019s annual stress tests passed comfortably, setting the stage for the group to boost buybacks and dividends for shareholders.<\/p>\n
The results showed \u201cmuch better than expected declines in stress capital buffers at all our banks,\u201d JPMorgan Chase & Co. analysts including Vivek Juneja wrote in a note. \u201cExpect the large decrease in capital requirements to likely drive increased share buybacks at all the banks that saw a decrease.\u201d<\/p>\n
Meanwhile, analysts at Raymond James anticipate total payouts to \u201cmodestly increase,\u201d adding that they \u201cview the stress test results to be a net positive and should garner increasing investor interest in the sector.\u201d<\/p>\n
With quarterly earnings ahead, the easing of bank capital rules upcoming, loosening regulations and elevated interest rates at play US banking stocks are primed to keep ripping higher. Hedge funds are also see further room to run, snapping up shares at a furious pace.<\/p>\n
It\u2019s the rebound that many investors had been waiting for following President Donald Trump\u2019s November reelection, which many expected to usher in a wave of banking deregulation and pro-business policies. That was before he unleashed a global trade war in April that briefly knocked the industry off course.<\/p>\n
The \u201cresults of this year\u2019s stress test is more evidence that this period is the most positive regulatory change for banks in 3 decades,\u201d Wells Fargo analyst Mike Mayo wrote in a note. Goldman Sachs was the big test winner, along with JPMorgan, Bank of America and M&T Bank Corp, he said.<\/p>\n","protected":false},"excerpt":{"rendered":"(Bloomberg) — US bank stocks closed at their highest level in three years as investors continued to pile…\n","protected":false},"author":3,"featured_media":31133,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[3638,64,26387,26388,26386,22851,26389,67,132,68,26385],"class_list":{"0":"post-31132","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-bloomberg","9":"tag-business","10":"tag-east-west-bancorp-inc","11":"tag-kbw-bank-index","12":"tag-share-buybacks","13":"tag-stress-test","14":"tag-stress-tests","15":"tag-united-states","16":"tag-unitedstates","17":"tag-us","18":"tag-western-alliance-bancorp"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/114780655012336325","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/31132","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=31132"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/31132\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/31133"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=31132"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=31132"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=31132"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}