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Banks stocks gain after US Congress averts historic debt default

Published 06/02/2023, 12:58 PM
Updated 06/02/2023, 01:01 PM
© Reuters. FILE PHOTO: JPMorgan Chase Bank is seen in New York City, U.S., March 21, 2023. REUTERS/Caitlin Ochs/

(Reuters) - Shares of U.S. banks rose on Friday after the U.S. Senate on Thursday passed bipartisan legislation that lifted the government's $31.4 trillion debt ceiling and averted a historic default.

Shares of JPMorgan Chase & Co (NYSE:JPM), Goldman Sachs (NYSE:GS), Morgan Stanley (NYSE:MS), Citigroup (NYSE:C), Wells Fargo (NYSE:WFC) and Bank of America (NYSE:BAC) gained between 2.2% and 3.8%

Their mid-sized counterparts, Charles Schwab (NYSE:SCHW), PNC Financial (NYSE:PNC), Regions Financial (NYSE:RF), US Bancorp (NYSE:USB), and PacWest Bancorp, gained between 2.9% and 12%.

Meanwhile, a key jobs data on Friday highlighted a cooling in wage inflation that reinforced bets that the central bank will steer clear of a rate hike this month.

Fed funds futures trading showed an over 70% probability that the Fed will hold interest rates steady at its June 13-14 policy meeting.

Banks stocks typically fall out of favor after expectations of rate hikes are lowered because their profits take a hit when interest rates dwindle.

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