Bank stocks outperformed the broader markets May 30, as the Federal Reserve kicked off efforts to pare back the Volcker rule, the Dodd-Frank rule limiting proprietary trading.
The Fed released its framework for reforming the rule, which proposes eliminating the assumption that any financial positions held for less than 60 days are prohibited transactions.
Shares of the large banks all rose in trading, as JPMorgan Chase & Co. added 2.28% to $108.35, Citigroup Inc. rose 1.48% to $66.68, Wells Fargo & Co. increased 2.42% to $54.23 and Bank of America Corp. gained 1.83% to $29.49.
New York Community Bancorp Inc. added 0.95% to $11.68.
Equities mostly bounced back Wednesday after stocks tumbled amid fears of a looming eurozone crisis triggered by a scramble in Italy to form a government. The Dow Jones Industrial Average increased 1.26% to 24,667.78, the S&P 500 added 1.27% to 2,724.01 and the Nasdaq Composite Index rose 0.89% to 7,462.45.
Speaking to CNBC, Wells Fargo analyst Mike Mayo said U.S. bank exposure to Italy is limited, but acknowledged that a meltdown in Europe could hurt earnings by 5% to 10%. But Mayo said the news is not all bad, adding that problems in Europe could also lead to earnings upside as U.S. banks take European share or seize M&A opportunities.
"We're a little tired of seeing this drill — 'there's a scare out here, sell all the banks' — when you have record capital, record liquidity, stress tests and some unique oversight," Mayo said.
At a conference in New York, JPMorgan Chase and Citi touted the prospects of international growth, but referenced emerging markets such as China and Mexico, instead of countries in the eurozone.
Among notable movers, Dallas-based Triumph Bancorp Inc. jumped 4.58% to $41.10 and Weston, Fla.-based FCB Financial Holdings Inc. added 3.10% to $61.60. Shares of New York-based Carver Bancorp Inc. decreased 3.97% to $6.04.
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