Bank stocks and corporate bonds hold gains on flat inflation report and Fed update
By Steve Gelsi
Tame CPI data send investors back into beaten-down regional-bank stocks, while yields fall on bank bonds
Bank stocks held on to gains on Wednesday after the Federal Reserve kept rates steady and a tame monthly inflation gauge sparked optimism in the sector.
Advances in bank stocks were more muted than earlier in the session, when a key inflation indicator stoked hope of interest-rate cuts by the Federal Reserve this year, possibly as early as September.
Some pundits now expect one 0.25% rate cut this year, while others forecast that there will be no rate cuts in 2024.
See: Live Fed rate decision
Lower interest rates could help ease jitters around the cost of commercial-real-estate refinancing, as office-property values in many areas remain depressed due to low demand for space, and as loans from banks come due.
The closely watched monthly consumer-price index for May was unchanged for the first time in about two years. The reading was better than the forecast from economists polled by the Wall Street Journal, which was for a 0.1% increase from the previous month.
"The latest CPI print was encouraging but will need to be ratified by incoming data over coming months before the Fed will be comfortable cutting rates," Daniel Murray, deputy head of global research at EFG Asset Management, said in a statement.
Financial stocks in the S&P 500 SPX rose nearly 2% Wednesday, for the second-largest gain among 10 subsectors tracked by FactSet. The gain outpaced the 1.1% rise by the S&P 500.
The SPDR S&P Regional Banking exchange-traded fund KRE jumped 3.4% as it regained some of its losses for the year tied to higher interest rates and commercial-real-estate exposure. So far this year, the index of regional banks is down 8.6%, compared with a 13.8% rise by the S&P 500 in 2024.
Among the financial-stock components of the S&P 500, Comerica Inc. (CMA) rose 4.5%, Blackstone Group Inc. (BX) moved up by 4.9%, Citizens Financial Group Inc. (CFG) advanced by 4.8% and T. Rowe Price Group Inc. (TROW) moved up by 4.4%.
Truist Financial Corp. (TFC) rose 3.6%, U.S. Bancorp (USB) moved up by 3.2%, KeyCorp (KEY) added 3. 5% and Fifth Third Bancorp (FITB) advanced by 3%.
Yields on corporate bonds from Fifth Third Bancorp, KeyCorp, Regions Financial and Synovus Financial Corp. (SNV) fell as their prices rose.
As yields in these names fell, bond prices moved up.
Investors poured money into bank bonds amid more bullish sentiment around the sector.
-Steve Gelsi
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
06-12-24 1459ET
Copyright (c) 2024 Dow Jones & Company, Inc.-
Six Sports Betting and iGaming Stocks Trading at a Discount
-
4 Predictions for Stocks and the Economy for the Second Half of 2024
-
What Broadening Rally? AI Stocks Dominate Again In Q2
-
After Earnings, Is Nike Stock a Buy, a Sell, or Fairly Valued?
-
Worst-Performing Stock ETFs of the Quarter
-
Top-Performing Stock ETFs of the Quarter
-
Q2 In Review and Q3 2024 Market Outlook
-
5 Stocks to Buy for 3Q 2024
-
Industrials: Sector Offers Investment Opportunities as Performance Lags Broader Market
-
Consumer Defensives: Even Amid Macro Pressures, Deals Permeate the Landscape
-
33 Undervalued Stocks
-
Utilities: Can the Stocks Keep the Rally Going?
-
Basic Materials: Following Index Decline, We See Many Long-Term Opportunities
-
Healthcare: Valuations Look Attractive In Most Industries
-
Financial Services: Amid Uncertainties, We See the Most Value In Banks and Credit Services
-
Consumer Cyclicals: Even With Anxiety Over Spending, We See Attractive Valuations