Bank stocks climbed on Tuesday, as positive COVID-19 vaccine news boosted investors’ hopes for an economic recovery.
By the close of trading, shares of megabanks JPMorgan Chase (NYSE:JPM), Wells Fargo (NYSE:WFC), Citigroup (NYSE:C), and Bank of America (NYSE:BAC) were up 3.2%, 2.5%, 1.7%, and 1.4%, respectively.
Rising coronavirus case counts in the U.S. and many other areas of the world have sparked concerns that government officials could be forced to slow economic reopening plans. This has weighed on the banking industry, whose profits are generally tied to the health of the economy.
But on Tuesday, Russia said it registered the world’s first COVID-19 vaccine. Though U.S. health officials questioned the veracity of Russia’s claims regarding the safety and efficacy of its supposed vaccine, investors reacted to the news by selling safe-haven assets, including U.S. Treasury bonds. That, in turn, drove interest rates higher (bond yields move inversely to bond prices).
Banks, which are typically more profitable in rising-rate environments, saw their stock prices climb on the news.
If Russia’s vaccine is confirmed to be effective against COVID-19, JPMorgan Chase, Wells Fargo, Citigroup, and Bank of America (as well as other bank stocks) could certainly rally further in the weeks and months ahead.