Democrats appear to be on the precipice of taking control of the Senate, leading to an unlikely near-term beneficiary: financial stocks.
With Rev. Raphael Warnock and Jon Ossoff expected to flip Georgia's seats blue, lawmakers on Capitol Hill seem primed to pass a stimulus relief package once President-elect Joe Biden is inaugurated Jan. 20. And while a Democrat-led Senate is sure to bring a more critical lens to the financial industry in the coming years, banks' and brokers' stocks reacted positively the day after the Georgia runoffs, with many names popping on the market's open Jan. 6.
The S&P 500 jumped as trading began, with the index up 1.11% to 3,768.05 as of noon ET, while the yield on the 10-year U.S. Treasury jumped past 1% for the first time since March 2020. Financial stocks were broadly outpacing the market, with the S&P 500 Financials index up 4.33% as of noon ET.
JPMorgan Chase & Co., the nation's biggest lender, saw its stock rise 4.32% to $131.36, as of noon ET, marking its highest level since last February before the COVID-19 pandemic ravaged equity prices. Shares of Bank of America Corp.'s stock jumped 6.54% to $32.25. Wells Fargo & Co. saw its share price increase 2.18% to $32.77. And Citigroup Inc.'s stock rose 6.68% to $65.82.
Several banks with large exposures to the decimated hotel industry spiked as well. Hope Bancorp Inc. shares were up 10.76% to $12.25, as of noon ET. Loans to hotels and motels accounted for 12.4% of the Los Angeles-based bank's portfolio, as of Sept. 30, 2020. For Great Western Bancorp Inc., hotels accounted for 12% of its gross loans at the end of the 2020 third quarter. The Sioux Falls, S.D.-based lender saw its shares jump 9.74% to $22.98 on Jan. 6, as of noon ET.
Morgan Stanley and Goldman Sachs Group Inc., meanwhile, saw their shares gain 6.55% and 4.98%, to $74.04 and $284.32, respectively, as of noon ET.
It is not just traditional banks rising on renewed hopes for wide-scale stimulus, either.
Retail brokerage Charles Schwab Corp.'s stock was up 6.88% to $56.40, as of noon ET. That marked the shares' highest price since mid-2018. Fixed-income trading platform company Tradeweb Markets Inc. saw its share price rise 4.71% to $65.31 at the same time. And exchange giant CME Group Inc.'s shares had spiked 7.51% to $192.58, their highest levels since early 2020, as of noon ET.