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The Federal Reserve hiked rates by 25 basis points Wednesday.
Dreamstime
Regional bank stocks looked set to rebound early Thursday as the market digested remarks made by Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen.
Citigroup
(ticker: C) CEO Jane Fraser added her vote of confidence into the mix, as she said the banking system is “pretty sound,” at the Economic Club of Washington Wednesday. “This is not a credit crisis. This is a situation where a few banks have some problems and it’s better to make sure we nip that in the bud,” she said, according to several reports.
First Republic Bank
(FRC) stock pointed 8% higher in premarket trading Thursday, while
PacWest Bancorp
(PACW) climbed around 4.5%. Both suffered double-digit percentage losses Wednesday. Shares in
Western Alliance Bancorp
(WAL) were 6% higher ahead of the open.
The market’s confidence in the regional banking sector is brittle, to say the least, at the moment–the reaction to Yellen’s comments are a prime example of that.
Powell and Yellen both spoke about the safety of deposits but weren’t quite on the same page when it came to messaging. Powell, attempting to reassure the public, said “depositors should assume that their deposits are safe,” at a news conference after the Fed decided to hike rates by 25 basis points. He added that the central bank has the tools to protect depositors when there’s a threat of serious harm to the economy.
That was all well and good. But…
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