Many bank stocks bounced back sharply on Tuesday, with those whose shares got hammered a day earlier mostly seeing large rebounds.
Western Alliance Bancorp finished the day up more than 14%, First Republic Bank rose 27%, and PacWest Bancorp jumped 34%, cooling somewhat after even hotter gains in the morning. Shares of all three banks
Other banks with more meager losses on Monday also rebounded, and the KBW Nasdaq Bank Index benchmark was up more than 3%.
Jeff Davis, who focuses on banks at Mercer Capital, chalked up much of the strong performances earlier on Tuesday to renewed investor confidence after something that didn't happen Monday: "No one failed last night."
"We went to bed and got up this morning, and the [Federal Deposit Insurance Corp.] didn't close anyone else," Davis said, suggesting that any troubles that individual banks were experiencing have so far not been fatal.
Though the industry isn't out of the woods, investors appear to be realizing that the tech-heavy Silicon Valley Bank and the crypto-friendly Signature Bank had "idiosyncratic" risks and far less stable deposits, said Greg Hertrich, head of U.S. depository strategies at Nomura.
"I think the tone from clients has evolved from one of fear to one of a more rational measurement of the risks at individual institutions and systemically," Hertrich said, though he added it's "always dangerous to speculate" on market sentiment.
In one sign that the risks are not over, the ratings firm Moody's Investors Service took a more negative tone on U.S. banks as a whole on Tuesday. It downgraded its outlook for the industry to negative, from stable, due to the "rapid deterioration in the operating environment."
The four largest U.S. banks were back in the green Tuesday after falling a day earlier. JPMorgan Chase jumped 2.57% to $134.62 after experiencing its small decline Monday. Wells Fargo jumped 4.58% to $40.17, Bank of America rose 0.88% to $28.76, and Citigroup soared 5.95% to $47.40.
Some regional banks had mixed performance. PNC Financial Services Corp., the Pittsburgh-based superregional bank, had fallen in the afternoon but ended the day up 0.36% to $130.53. Regions Financial in Birmingham, Alabama finished the day up 0.58% after a small decline earlier. Fifth Third Bancorp in Cincinnati gained 0.5% to $26.38, also recouping earlier losses.
BankUnited in Miami Lakes, Florida, fell 4.46% to $23.97. Valley National Bancorp in Wayne, New Jersey, lost 3.7% to $9.64, and Pinnacle Financial Partners in Nashville, Tennessee, slid 3.24% to $55.18.
One factor that may be helping soothe investor concerns over banks' footing is the Federal Reserve's
Critically, the Fed is valuing those underwater bonds "at par," so banks don't have to take a loss on them.
"The Federal Reserve's stepping up and doing what it's supposed to do — and that is provide liquidity to the system," Davis said.
