In anticipation of a Federal Reserve decision, regional US banking stocks rebounded along with the broader market rally on Wednesday, reversing the previous day’s sharp decline triggered by the troubled lender First Republic Bank’s failure.
The event had prompted investors to scrutinize the sector’s future prospects.
PacWest Bancorp and Western Alliance Bancorp led the industry’s rebound on Wednesday as US stocks rallied ahead of the Federal Reserve’s interest rate decision, Bloomberg reported via Yahoo News.
Both stocks had experienced a sharp decline on Tuesday along with other regional bank stocks, causing concern in the broader market regarding the industry’s stability.
As of 11 a.m. New York time, PacWest Bancorp surged by up to 15%, and Western Alliance Bancorp rose by as much as 7.7%.
The KBW Regional Banking Index also rose by up to 2.9%, reversing the 8% decline it experienced at the start of the week.
Meanwhile, US stocks in general have been fluctuating as investors anticipate the Federal Reserve’s expected interest-rate hike later in the day, as reported by Bloomberg.
However, Robert Kaplan, the Dallas Fed president, urged policymakers to pause their rate-hike campaign, given that the banking crisis may not yet be over.
First Republic Bank, which JPMorgan Chase & Co. acquired on Monday through a government-led deal, was the fourth US lender to fail this year.
Written by staff