Financial Stocks Surge Again, With J.P. Morgan Chase Shares Headed For Another Record

By Markets MarketWatch Pulse

Financial stocks extended their surge in premarket trade Thursday, in the aftermath of Donald Trump's election victory. The SPDR Financial Select Sector ETF rallied 0.9%, on track to open at the highest level since May 2008, after running up 4.3% on Wednesday. J.P. Morgan Chase & Co.'s stock climbed 1.3% ahead of the open, after soaring 4.6% Wednesday to a record close. Shares of Bank of America Corp. rallied 2.8% toward a 16-month high in the wake of Wednesday's 5.7% jump, while Citigroup Inc. shares rose 1.3% toward a new 2016 high after advancing 3.4% the day before. Many analysts expect the regulatory environment to ease and a boost in government spending to raise Treasury supply under a Trump presidency, which should lift longer-term interests rates. And higher long-term yields can boost bank profits, as they increase the spread between what banks earn by funding longer-term assets, such as loans, with shorter-term liabilities The yield on the 10-year Treasury note increased 0.018 percentage points to 2.09% early Thursday, after closing at a 10-month high on Wednesday. The XLF has gained 7.7% year to date through Wednesday, while the Dow Jones Industrial Average has advanced 6.7%.

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