Bank stocks have had to face the brunt of the pandemic, especially in the initial stages of the outbreak. There were major concerns about the overall health of the economy as well as the ability of borrowers to continue making loan repayments. However, things are now starting to look more optimistic. There are vaccines for the virus and the pandemic seems to be gradually subsiding. Therefore, now may be an opportune moment to start looking at bank stocks. The big banks in the US are JP Morgan Chase & Co, Bank of America, Wells Fargo, Citigroup, and Morgan Stanley. A lot of these stocks have been on an uptrend since late January 2021, reflecting the positive mood among investors for bank stocks.
Key Factors Affecting Bank Stocks
There have been some important developments in recent times that seem to have had an impact on bank stocks. Firstly, the 10-year treasury yields have risen significantly from the lows of the pandemic. They have crossed the 1.6% level in February 2021. Higher yields seem like a manifestation of expectations that inflation will rise and so will economic growth. The second major development has been the approval of multiple vaccines throughout the world to fight the pandemic. And thirdly, the US presidential elections are now over and the results are clear after some temporary uncertainty.
JP Morgan’s stock closed at $144.65 on 16th February 2021. The stock is up 63% since the March 2020 market fall and up 6.7% on a 1-year basis. Meanwhile, Bank of America’s stock closed at $34.27 on 16th February 2021. The stock has gained 89% since the March 2020 market crash. Wells Fargo was trading at $34.79 on 16th February 2021. The stock has gained 54% since the March 2020 market fall and is in the red on a 1-year basis.