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Friday's Bank Stocks: Continue 2-day rally with no clear impetus

U.S. bank and thrift indexes continued their two-day rally Friday, June 9, although the reasons why were unclear, according to Lou Brien, market strategist at DRW Trading Group.

The SNL U.S. Bank Index closed up 2.51% to 541.82 and the SNL U.S. Thrift Index rose 2.71% to 921.55. The Dow Jones Industrial Average gained 0.42% to 21,271.97 and the S&P 500 fell 0.08% to 2,431.77. After a sharp selloff from Amazon, Google and Apple, the Nasdaq composite index dropped 1.80% to 6,207.92 its biggest single-day decline since May 17.

On Thursday, the U.S. House of Representatives passed the Financial CHOICE Act, which is intended to bring banks – both large and small – relief from what supporters say are burdensome financial regulations. But Brien said he did not think the bill's passage caused bank stocks to rise today.

"It's an easy dot to connect, sure," he said. "But I don't know if there is a real sense that [the CHOICE act] is going to get through the Senate as-is."

Brien said there is no certain impetus behind the financial sector's strong performance today. It could just amount to traders being under pressure because of the collapse of the U.S. Treasury yield curve, he said. Over the past decade, the yield on the 10-year U.S. Treasury note has fallen from a peak of 5% in 2007 – a year before the financial crisis – to around 2% today.

When asked whether the outcome of the U.K. election affected U.S. markets Friday, Brien said he thought it was a nonissue domestically. After a tense snap election Thursday, Prime Minister Theresa May's Conservative Party maintained a plurality in Parliament but lost a net 12 seats and the majority. The pound fell 1.7% against the dollar to nearly $1.27 at 4:00 p.m ET in its worst trading day since October.

Among the big four banks, JPMorgan Chase & Co. rose 2.37% to $86.96, one day after COO Matt Zames announced he is leaving the company to focus on his business. Bank of America Corp. rose 3.05% to $23.67, Wells Fargo & Co. rose 2.36% to $53.80 and Citigroup Inc. rose 1.96% to $64.45.

In merger news, QCR Holdings Inc. is acquiring all assets of Guaranty Bankshares Ltd. in a cash-and-stock deal valued at roughly $44.2 million. QCR Holdings rose 2.80% to $47.80.

Simmons First National Corp. added 3.61% to $54.55. The company's units Simmons Bank and First South Bank are merging, according to a regulatory filing.

Among other bank movers, Capital City Bank Group Inc. rose 7.27% to $21.83, Enterprise Bancorp Inc. gained 6.93% to $34.39 and Ameris Bancorp rose 6.72% to $49.25.

In the thrift space, Dime Community Bancshares Inc. rose 7.12% to $21.05.

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