US bank stocks have reached their highest level in three years, fuelled by investor optimism following the Federal Reserve’s recent stress test results. The KBW Bank Index climbed 1.5 per cent, marking its best close since February 2022 and nearing its all-time high from early 2022. The index has seen gains for nine consecutive days, equalling its longest winning streak. The KBW Bank Index tracks the performance of a group of major US bank stocks. It provides an overview of the health and investor sentiment towards the banking sector.
Leading the charge were Western Alliance Bancorp, East West Bancorp Inc, and Zions Bancorp NA, with almost all of the index’s 24 members showing gains. The positive momentum follows the banks’ successful navigation of the Federal Reserve’s stress test, which has raised expectations of increased share buybacks and dividend payouts.
JPMorgan Chase announced after the market closed that it has approved a new $US50 billion share repurchase program. The company also plans to increase its quarterly dividend to $US1.50 per share. JPMorgan Chase is a global financial services firm with assets exceeding $3.9 trillion. It provides investment banking, asset management, and other financial services to consumers and institutions.
Adding to the positive news, Bank of America has increased its quarterly dividend to 28 US cents per share, up from 26 US cents. Similarly, Wells Fargo will raise its quarterly dividend to 45 US cents per share, an increase from the previous 40 US cents, further solidifying investor confidence in the banking sector’s financial health.
