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Friday's Bank Stocks: Markets bounce on jobs rebound


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Friday's Bank Stocks: Markets bounce on jobs rebound

Data showing a rebound in the U.S. labor market fueled a rallyamong banks and thrifts and drove broader markets higher during trading Friday,July 8.

The SNL U.S. Bank Index rose 1.91% to 384.58 and the SNLU.S. Thrift Index was up 1.22% to 783.33.

Wider markets recorded healthy gains after the most promisingeconomic data release since domestic and global markets were thrown into turmoilby the U.K.'s vote to leave the European Union. The U.S. Labor Department announcedthat total nonfarm employment climbed by 287,000 during June, though the headlineunemployment rate rose slightly to 4.9%. That figure was a rebound from the previousreading in May, which was well below expectations, and along with the Brexit votecontributed to fears of a domestic slowdown.

"This puts [jobs creation] back on trend … and seems asthough it takes the possibility of a recession firmly off the table," Jay Morelock,an economist with FTN Financial, said in an interview.

According to Econoday data made available by Bloomberg, the consensusestimate called for the creation of 180,000 jobs in the month.

Still, Morelock said it was unlikely that these job growth numberswould be enough to fuel the type of wage rate growth and inflation pressures thatmight fast forward. "It puts the outlook for the U.S. economy back to whereit's been for sometime: growth somewhere north of 2%, and core inflation somewherearound 1.5%," Morelock said, saying that the jobs improvement was the market'sfirst step toward moving beyond the Brexit vote. He saidlast year's surprise devaluation of the Chinese yuan was another unexpected globalevent which spurred market volatility but ultimately did little to change the fundamentalsof the domestic U.S. economy.

The Dow Jones Industrial Average added 1.40% to 18,146.74, theS&P 500 advanced 1.53% to 2,129.90 and the Nasdaq composite index climbed 1.64%to 4,956.76.

The broad-based optimism also carried the banking industry'sbiggest names to gains. JPMorgan Chase& Co. added 2.06% to $61.83, Bankof America Corp. was up 1.23% to $13.17 at the close, jumped 2.12% to $47.79and Citigroup Inc. closedat $41.98, up 1.67%.

Capital One FinancialCorp. surged 4.56% during trading to close at $64.71.

State Street Corp.closed up 2.29% to $53.23, and Bankof New York Mellon Corp. added 1.93% to $38.49.

Cathay General Bancorpshares jumped 4.94% to $28.70 after the company announced that it will buy Los Angeles-based in a $340 million deal.Company executives said in a call to discuss the deal that they expect to trim thetarget's noninterest expense base by 60% and outlined a strategic partnership with its Taiwanese parentcompany.

Among thrifts, NewYork Community Bancorp Inc. was up 0.41% to $14.73 and closed at $17.43,up 1.40% on the day.

Market prices and index values are current as of the time ofpublication and are subject to change.