First Republic Bank and other regional bank stocks rose cautiously early Wednesday ahead of the Federal Reserve’s interest rate decision.
Shares of the San Francisco-based bank fell in after-hours trading, but were almost flat 3% Ahead of the open, it’s a sign that volatility isn’t over yet.
Banking consultants Lazard (ticker: LAZ) and McKinsey & Co. has hired as it explores options including a sale or asset trimming, The Wall Street Journal reported. Bloomberg reported late Tuesday that Wall Street CEOs and U.S. officials were exploring the possibility of government support to secure a deal to raise the First Republic.
First Republic shares ( FRC ) struggled on Tuesday after reports that JPMorgan Chase ( JPM ) CEO Jamie Dimon is leading rescue talks, according to The Wall Street Journal. However, shares are down 90% since early March.
Comments from Treasury Secretary Janet Yellen appeared to help ease fears, as she told a banking conference that “the situation is stabilizing.” He also said the government could take steps to protect depositors of other banks like Silicon Valley Bank and Signature Bank.
Advertisement – Scroll to continue
Other regional bank stocks got a much-needed boost on Tuesday after a long period of pressure. Shares of PacWest Bancorp ( PACW ) rose 19%, Western Alliance rose 15% and KeyCorp ( KEY ) rose 9%. The US KBW Bank Index rose 5% – its best daily performance this year.
All eyes will be on the central bank later, as bank stocks continue to rally and make a March decision on interest rates. According to the CME FedWatch tool, expectations have fluctuated significantly over the past ten days, but traders now forecast a 25 basis point hike.
“There will be a lot of focus on the central bank [will] hike today, but how they view the current volatility and whether they expect more rate hikes after today will be key,” Deutsche Bank analysts said early Wednesday.
Advertisement – Scroll to continue
Write to Callum Keown at [email protected]
