Bank stocks lead market surge on dividend hopes
Thursday’s wild stock market rally got a late boost from a report that federal regulators will open the door for bigger bank-stock dividends.
The Federal Reserve is expected to soon allow financially strong banks to increase their dividends, the Wall Street Journal reported, citing unnamed sources.
Banks have been discouraged from lifting dividends even as their earnings have rebounded and many have repaid all of the federal capital they received under the TARP bailout program in 2008. One issue holding them back has been uncertainty about new capital requirements that global bank regulators have been negotiating this year.
Many of the biggest banks have been itching to raise their dividends after slashing them in the wake of the financial crisis and the TARP bailout.
Among the giants, JPMorgan Chase soared $2.08, or 5.5%, to $39.80 Thursday, with nearly all of that gain following the Wall Street Journal report.
Bank of America Corp. gained 61 cents, or 5.3%, to $12.13, Wells Fargo & Co. rallied $1, or 3.8%, to $27.46 and U.S. Bancorp rose $1.11, or 4.6%, to $25.16.
Financial stocks were the biggest gainers among the 10 major industry sectors in the Standard & Poor’s 500 index. The financial group jumped 3.4% while the S&P index overall was up 1.9% to a two-year high.
Year-to-date the financial sector is up 5.8% compared with the 9.5% rise in the S&P 500.
-- Tom Petruno