Bank Stocks might be winners during the last couple of weeks of 2020
On Friday Dec 18 2020, the Fed announced that Banks could resume buying back their own stocks again. This reverses the decision to halt big banks from buying their own stocks which was made back in March of this year due to the corona virus situation. Starting next month, the central bank will permit banks to buy back a certain amount of shares based on their income from the prior year.
Already couple of banks reacted to the news by announcing buybacks that will start in the first quarter of 2021. In a statement following the Fed’s announcement, JPMorgan Chase [stock_quote symbol=”JPM”] said its board has approved a new shared repurchase program of $30 billion. Goldman Sachs [stock_quote symbol=”GS”] said it intends to resume its shares repurchase program next quarter.
Bank stocks soared in after hours trading on Friday following the news. Bank of America [stock_quote symbol=”BAC”] was up more than 4%, JPMorgan shares were up 5% and Citigroup [stock_quote symbol=”C”] shares were up by more than 5%.
In addition and in over the weekend news, there seem to be some progress on making a decision on the stimulus plan which should also boosts stocks and especially bank stocks.
All indications points towards a higher open for bank stocks tomorrow Monday Dec 21st. In my opinion there is a very good case that bank stocks will appreciate the most during the last couple of weeks of this year, unless some really bad event happens.