First Republic (FRC) and other regional banks rose sharply on Tuesday, in a stunning reversal from the previous session when the sector was hammered following the collapse of Silicon Valley Bank.
First Republic shares rose 33% during the afternoon session. The San Francisco based bank’s stock had opened 55% higher after losing a record 62% of their value on Monday.
Western Alliance’s (WAL) shares rose as much as 47%, while PacWest Bancorp (PACW) stock rebounded more than 40% after falling 21% on Monday. Zions Bank Corporation (ZION) rose 19% before giving up those gains, following a slide of 25% in the previous session.
Charles Schwab (SCWH) is rebounding about 10% 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, though pointing to a near term decrease in earnings per share. Brian Bedell and Same Desai reiterated their Buy rating on the stock, and forecast 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
Click here for the latest stock market news and in-depth analysis, including events that move stocks
Read the latest financial and business news from Yahoo Finance
Leave a Reply