Regional-bank stocks on Friday lagged the broader market but rose from lows earlier in the day, as Wall Street reacted to a rise in Treasury yields driven by a stronger-than-expected September jobs report.
For the week, the SPDR Regional Banking ETF is down 2.2%, the KBW Nasdaq Bank Index is down by 3.4%, while the S&P 500 has fallen 0.5%. On Friday, JPMorgan Chase & Co. JPM, +1.81% rose 1.3%, Bank of America Corp. BAC, +0.33% rose 0.8% and Goldman Sachs Group Inc. GS, +1.34% rose by 0.9%. Higher bond yields impact the fair value of bank bond portfolios, while increasing unrealized losses on the bank’s loan portfolio. These factors also put pressure on deposit costs and present a headwind on net interest income.
The yield on the 2-year Treasury BX:TMUBMUSD02Y dropped from earlier levels but held on to a gain of 4.4 basis points to 5.067% on Friday, from 5.023% in the previous day.
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