First Republic (FRC) and other regional bank stocks rallied during a volatile session on Tuesday, a reversal from Monday’s heavy sell-off following the collapse of Silicon Valley Bank.
First Republic shares closed 28% higher in their biggest one day gain on record. The San Francisco-based bank’s stock surged as much as 55% after losing a record 62% of its value on Monday.
Western Alliance (WAL) shares rose more than 47% but settled 15% higher in what proved to be a volatile session. PacWest Bancorp (PACW) stock rebounded 28% after falling 21% in the prior session. Zions Bank Corporation (ZION) closed more than 4% higher but was flipping between positive and negative territory throughout the session. Zions slid 25% on Monday.
Charles Schwab (SCWH) rebounded 9% on Tuesday after closing 11% lower in the previous session. The financial services company’s stock was hit despite assurances it was well positioned, and had plenty of liquidity on hand.
Analysts at Deutsche Bank said liquidity risks for Charles Schwab were overblown, but pointed to a near- term decrease in earnings per share. Brian Bedell and Same Desai reiterated their Buy rating on the stock and see an “earnings impact from the cost of bearing greater liquidity as being significant for 2023.”
Market observers on Twitter noted the oversold conditions of the regional lenders on Monday, despite measures from U.S. regulators, which guaranteed deposits were safe. Famed investor Michael Burry wrote, “This crisis could resolve very quickly. I am not seeing true danger here.”
Last Friday, Silicon Valley Bank, previously owned by SVB Financial (SIVB), was shut down by regulators as depositors flocked to get their money out of the bank. Many of Silicon Valley Bank’s clients were startups and venture capital firms, with accounts that far exceeded $250,000, the amount normally insured by the Federal Deposit Insurance Corporation, or FDIC.
On Sunday, another domino fell. Crypto-focused Signature Bank of New York (SBNY) was closed by its state chartering authority.
Sunday evening U.S regulators announced all depositors of SVB and Signature Bank would be made whole, and announced new facilities to backstop deposit withdrawals across the banking system.
Ines is a senior business reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre
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Source: https://finance.yahoo.com/news/bank-stocks-rebound-as-investors-see-buying-opportunity-in-oversold-lenders-172719449.html