Bank of America, Wells Fargo lead gains in big-bank stocks to add to November’s win

Bank of America Corp.’s and Wells Fargo & Co.’s stocks on Thursday led gains among the six largest U.S. banks, as November came to a close with some of the biggest monthly stock gains in the sector for more than a year.

The gains are being fueled partly by improved investor sentiment that banks will benefit from potential interest-rate cuts and a more favorable yield curve in the bond market, an investing executive told MarketWatch.

Bank of America

shares rose 1.4% on Thursday and have gained about 15.8% in November, for the stock’s first best overall monthly gain since October 2022 as of Wednesday’s close, according to Dow Jones Market Data.

Wells Fargo

shares were up by 1.9% to notch a 12.12% gain for the month of November. It’s the stock’s best monthly performance since January 2023.

JPMorgan Chase & Co.’s stock

rose 1.1% and has gained 12.2% for the month. The stock’s performance in November ranks as its best since October 2022.

Goldman Sachs Group Inc.’s stock

was up by 0.4% on Thursday and has risen 12.5% in November for its best month since October, 2022.

Morgan Stanley

shares rose 1% and have gained 12% in November, for the stock’s best performance since January, 2023.

Citigroup Inc.’s stock

rose by 0.8% and has moved up by 16.7% for the month in its best showing since November, 2020.

The Financial Select SPDR Fund
moved ahead by1.1% on Thursday, and is up by 10.9% in November.

The KBW Bank Index
rose by 1.1%, with a gain of 14.9% for the month, its best showing since February, 2021.

The SPDR S&P Regional Banking ETF
rose by 0.2%, with a 13.7% gain for the month in its largest move up since July.

Looking back on the month, the sector shifted into rally mode on Nov. 14 after tame data from the consumer-price index.

Huntington Private Bank

Chief Investment Officer John Augustine, who oversees about $23 billion in assets under management, said bank stocks came into favor in November as markets started seeing less yield-curve inversion, amid the expectation for a positive yield curve in the second half of 2024.

The sector is getting a boost from the likelihood that the current yield-curve inversion is coming to an end.

A normal yield curve means that banks can borrow money at less expensive, short-term rates and lend it out on longer-term, higher interest rates, he said.

For its part, the bank’s equity team for wealthy clients has been rotating into bank stocks from insurance and credit-card companies, Augustine said. 

Improved economic conditions from banks could start to become evident by first-quarter earnings season in January, Augustine said.

“Evidence of improved economic conditions will continue to be a focus in the first half of 2024, but [Wall Street] consensus, and we, are getting more positive,” Augustine said.

Investors appear to have too much money parked in cash, he said.

Bonds were attractive starting in the middle of 2023 because of higher yields, but now bank stocks are offering better returns as they benefit from relatively high dividend yields and the potential for share prices to move higher, he said.

Even with November’s gains, many bank stocks remain deeply in the red for the year, even as the S&P 500
has risen by 18.5%.

Bank of America’s stock is down 7.8% in 2023, while Morgan Stanley shares are down by 56.9% and Goldman Sachs shares are down about 0.7%.

JPMorgan Chase shares are up by 16.1% in 2023, while Citigroup’s stock has gained 1.9% so far this year and Wells Fargo is ahead by 8.4%.

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