Bank and thrift stocks closed lower Wednesday, Dec. 14, along with broader markets, after the Federal Open Market Committee's much-anticipated rate hike.
Top Federal Reserve officials announced that they raised the target range of the U.S. central bank's key interest rate by 25 basis points after their final monetary policy meeting of 2016. The FOMC voted unanimously to lift the target range for the federal funds rate to between 50 basis points and 75 basis points.
The central bank noted that job gains have been solid in recent months, while the unemployment rate has fallen.
Robert Dye, chief economist at Comerica Bank, thinks the markets are reacting more to Federal Reserve Chair Janet Yellen's speech than the announcement itself.
He said the move was widely anticipated. "In fact if they had not moved, that would have been a big surprise," he added. The Fed also shifted its dot plot a bit: December projections show a median of three rate hikes in the next year while September projections showed a median of only two.
"Given expectations of some positive economic news from the Trump administration that growth would continue through next year, the Fed would probably get ahead of the inflationary pressure by increasing rates just a little bit more," Dye noted. However, he added that the "key word there is 'little.'"
"This is not a radical rethink of the economy because of the incoming Trump administration. This is just a recognition that growth at the end of this year looks a little bit better than expected," he added.
The SNL U.S. Bank Index decreased 0.55% to 529.59, and the SNL U.S. Thrift Index slid 0.78% to 962.76. The Dow Jones Industrial Average slid 0.60% to 19,792.53, the S&P 500 decreased 0.81% to 2,253.28 and the Nasdaq composite index declined 0.50% to 5,436.67.
JPMorgan Chase & Co. slid 0.04% to $84.73, Bank of America Corp. was up 0.27% to $22.67, Citigroup Inc. decreased 0.57% to $59.45, and Wells Fargo & Co. declined 2.04% to $54.70.
Regulators said Tuesday that they again rejected Wells Fargo's 2015 "living will" resolution plan after the company failed to "adequately remedy all of its deficiencies."
ConnectOne Bancorp Inc. closed 0.97% lower at $25.60. With the possibility of a fourth-quarter loss due to the deterioration of its New York City taxi medallion portfolio, the Englewood Cliffs, N.J.-based company launched a common stock offering to support potential actions regarding the portfolio. The company expects to raise up to $38.4 million from the offering.
Renasant Corp., which priced a common stock offering of 1.9 million shares at $41.50 per share, saw its stock close 3.76% lower at $41.44.
On the M&A front, Virginia-based banks Southern National Bancorp of Virginia Inc. and Eastern Virginia Bankshares Inc. plan to merge in a stock transaction worth approximately $178.3 million. Southern National's stock climbed 1.99% to $15.90, and Eastern Virginia's stock rose 2.59% to $9.92.
Among price losers, First NBC Bank Holding Co. lost 25.00% to $7.20, Trustmark Corp. declined 2.34% to $35.01, and Signature Bank retreated 2.22% to $147.40.
In the thrift space, New York Community Bancorp Inc. lost 0.65% to $16.86, and BofI Holding Inc. fell 4.03% to $26.89.
In other economic news, mortgage applications decreased 4% from a week ago on a seasonally adjusted basis for the week ended Dec. 9, the Mortgage Bankers Association reported.
Market prices and index values are current as of the time of publication and are subject to change.