Banking sector stocks jumped May 22 as Congress appeared closer to finalizing a revamp of the Dodd-Frank law.
The revision bill is expected to get a vote today in the U.S. House of Representatives, where GOP leaders agreed to take up the Senate-approved proposal as-is. President Donald Trump has said he will sign the bill into law.
The major U.S. stock indexes finished the day with mild losses, following Trump's comments that there was a "substantial chance" his summit with North Korean leader Kim Jong Un may be delayed. The S&P 500 fell 0.31% to 2,724.44, the Dow Jones Industrial Average gave back 0.72% to 24,834.41 and the Nasdaq Composite Index dropped 0.21% to 7,378.46.
The movement in Congress helped provide a lift to the banking sector, as did talk of Volcker Rule revisions, which would provide a "tailwind to some of the larger banks" with capital markets operations, said Yousef Abbasi, global market strategist at JonesTrading.
Investors are also seeing an improved bank M&A outlook following the May 21 announcement that Fifth Third Bancorp will acquire Chicago-based MB Financial Inc. in a $4.7 billion deal, Abbasi said. Fifth Third, he noted, is paying a "significant premium" over MB Financial's share price, a sign that "some regional banks could merit larger premiums" in future deals.
"That revitalizes this whole belief that maybe we can get some sort of level of consolidation back in regional banks — and something that is a little bit more convincing than what we've seen in the past," he said.
Both banks saw significant gains to end the day, with Fifth Third rising 3.20% to $31.89 and MB Financial adding 3.39% to $50.95.
Among the Big Four banks, JPMorgan Chase & Co. finished up 0.77% to $113.01, Bank of America Corp. gained 1.11% to $30.89, Citigroup Inc. added 0.92% to $71.08 and Wells Fargo & Co. tacked on 1.32% to $55.26.
Major movers today included Hanmi Financial Corp., which improved 2.21% to $30.10, following news a day earlier of its planned acquisition of SWNB Bancorp Inc. Other banks seeing significant movements were Banc of California Inc., which increased 2.09% to $19.50, and BofI Holding Inc., which slumped 2.74% to $40.80.
Carver Bancorp Inc. continued seeing swings in its share price, finishing the day down 12.59% to $5.90. The New York-based company had spiked from $3.70 at the close of May 16 trading to $11.00 at the end of May 17, but has tumbled in the days since. The company said in a May 17 news release that there were no corporate developments "that would explain the trading activity."
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