World news – Bank stocks are back in vogue due to incentives and interest rate prospects


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Major U.S. banks have gone from losers to market leaders and bounced back from a pandemic-triggered chub as investors expect federal spending to spike in 2021 and the start of profitable season this one Week.

Whether or not they maintain that momentum will depend on the success of President-elect Joe Biden’s agenda, Federal Reserve monetary policy, and how quickly Covid-19 grinds to a halt. Investors were optimistic about economic growth. Banks saw interest rates rise as they increase lending, business processing and trading. The reintroduction of bank share buybacks last month and the election of Janet Yellen as Treasury Secretary by Biden in November also helped.

The KBW Bank Index rose 8.4 percent in January, following the rise of the S&P 500 Index 1.8 percent exceeded. Last year, the bank ad fell 14 percent while the broader market rose 16 percent. Three of the country’s largest lenders – JPMorgan Chase, Citigroup and Wells Fargo – released their quarterly results on Friday. Bank of America and Goldman Sachs will follow on January 19. Morgan Stanley reports Jan. 20.

Major and regional bank stocks made a comeback later in the year due to vaccination optimism and a rotation in value stocks from growth stocks, Christopher McGratty, analyst at Keefe Bruyette & Woods, wrote in a note last week. As we head into earnings season, « relative stock performance will be less about the quarter than about the outlook » for credit, earnings and capital management, he said.

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Goldman Sachs closed on January 7th with a record high. Wells Fargo analyst Mike Mayo had predicted that after better-than-expected results at Jefferies Financial Group, it would reiterate his view that « capital markets should stay stronger longer and outperform Goldman ». .

On Friday, Goldman commodities traders reportedly doubled their sales in 2020, indicating that Wall Street desks have managed to print profits by the year-end.

Bank stocks are due to optimism « back in style, » Goldman analyst Richard Ramsden wrote last week in terms of fiscal stimulus, infrastructure spending, rising interest rates and higher returns on capital. He highlighted the outperformance of stocks since the Fed released its special crisis stress test results in December, which concurred with his view that bank yields should « recover and make up » for nearly three quarters of the 2020 decline over the next two years. BLOOMBERG

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Related title :
Bank stocks back in style due to stimulus , Interest rate outlook



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