Bank and thrift stocks rebounded Thursday, Dec. 15, a day after the Federal Open Market Committee announced it will raise the U.S. central bank's key interest rate by 25 basis points.
The SNL U.S. Bank Index gained 1.33% to 536.65, and the SNL U.S. Thrift Index added 0.78% to 970.29. In broader markets, the Dow Jones Industrial Average rose 0.30% to 19,852.24, the S&P 500 gained 0.39% to 2,262.03 and the Nasdaq composite index added 0.37% to 5,456.86.
Jacob Thompson, managing director at SAMCO Capital Markets, said that though market observers were expecting the Fed to raise rates, the reality is now sinking in, and they are now looking to the future. He said aside from "short-term pain" associated with how a rate hike may affect equity, higher rates will lead to a more positive environment for financials.
"I think it was really showing, going forward, the path that they saw for 2017, maybe being a little bit more aggressive than originally people thought," Thompson said. "It still seems like they're going to be cautious with their raising rates and the pace at which they do it. You've seen banks, not only in Texas, that have been able to successfully raise capital here with various offerings in the market. I think there's some optimism of maybe getting some regulatory relief. Maybe in the long run, higher rates would be good for financials overall."
Pine Bluff, Ark.-based Simmons First National Corp. fell 4.48% to $61.85, amid news that the company will acquire the outstanding common stock of Stillwater, Okla.-based Southwest Bancorp Inc. in a deal valued at roughly $564.4 million. Southwest Bancorp, on the other hand jumped 19.75% to $28.50.
Other notable movers include SVB Financial Group, which gained 3.82% to $173.02, Independent Bank Corp. rose 2.98% to $70.95, TCF Financial Corp. added 3.24% to $19.42 and Tompkins Financial Corp. gained 2.62% to $90.84.
Among large caps, Wells Fargo & Co. jumped 0.90% to $55.19, JPMorgan Chase & Co. increased 1.50% to $86.00, Citigroup Inc. rose 1.31% to $60.23 and Bank of America Corp. ticked up 2.16% to $23.16.
In thrifts, Astoria Financial Corp. rose 1.54% to $17.78 and New York Community Bancorp Inc. added 1.30% to $17.08.
In economic news, the advance figure for seasonally adjusted initial jobless claims for the week ended Dec. 10 was 254,000, a decrease of 4,000 from the previous week, according to the U.S. Labor Department. The previous week's unrevised level was 258,000, while the four-week moving average was 257,750, compared to the previous period's unrevised average of 252,500.
Market prices and index values are current as of the time of publication and are subject to change.