Bank Stocks Bounce As Brexit Fears Take a Breather

By Tomi KilgoreMarketsMarketWatch Pulse

Bank stocks, which took some of the hardest beatings in the wake of the U.K. vote to leave the European Union, bounced in premarket trade Tuesday as investors took a breather from the global risk-off trade for the time being. The SPDR Financial Select Sector ETF climbed 1.1% ahead of the open, after tumbling 8.1% the past two sessions. Shares of Bank of America Corp. surged 2.6%, Citigroup Inc. climbed 2.1% and J.P. Morgan Chase & Co. rallied 1.5%. Over the past two sessions, BofA's and Citigroup's stocks had both plunged 13% while JPMorgan's dropped 10%. The yield on the 10-year Treasury note rose 3.6 basis points early Tuesday, after plunging about 28 basis points the past two sessions. Banks can benefit from rising longer-term interest rates, as it increases the spread they earn from funding longer-term asssets, such as loans, with shorter-term liabilities. Elsewhere, the U.S.-listed shares of the U.K.'s Barclays PLC gained 2.6%, after plummeting 37% the past two sessions.

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