AX - Why Bank Stocks Soared on Friday
After suffering steep losses in recent weeks due to a confluence of negative events, banks stocks rebounded sharply on March 13. Mega-banks JPMorgan Chase (NYSE: JPM), Bank of America (NYSE: BAC), Citigroup (NYSE: C), and Wells Fargo (NYSE: WFC), along with smaller banks such as SVB Financial (NASDAQ: SIVB), Western Alliance Bancorporation (NYSE: WAL), and Axos Financial (NYSE: AX), surged as much as 18% on Friday.
Fears related to COVID-19 -- the disease caused by the novel coronavirus -- have gripped the world in recent weeks. Investors, fearful that the pandemic would drive the global economy into a recession, have sought shelter in safe-haven investments, including U.S. Treasuries. Interest rates have plunged in response.
Many financial institutions are likely to be hurt by this since lenders' profit margins tend to decline when interest rates fall. In turn, many bank stocks have seen their prices plunge in recent weeks.