Market Update

PacWest Bancorp (NASDAQ: PACW) Leads Rebound of US Regional-Banking Stocks

PacWest Bancorp (NASDAQ: PACW) shares skyrocket 82%, regional banking sector sees a broad revival

PacWest Bancorp has made a remarkable comeback in the regional banking industry. Despite facing significant losses due to concerns about unrealized losses on bond investments and the collapse of four banks, the company has managed to recover and spearhead a broader revival in the US regional banking sector.

PacWest Bancorp shares rose by an unprecedented 82% on Friday, with trading halts due to high volatility, while Western Alliance Bancorp saw a 49% increase. Even Charles Schwab Corp. witnessed almost a 4% gain after its banking unit showed a slowdown in outflows for a third consecutive month. Other lenders, such as Zions Bancorp and Comerica Inc., which had suffered significant losses, also bounced back with increases of 19% and nearly 17%, respectively.

The recent government seizure and sale of First Republic Bank earlier this week, along with a report that PacWest Bancorp was exploring strategic options, had made investors nervous and led to a market downturn.

The KBW Bank Index had declined by 11% through Thursday. However, on Friday, the benchmark surged by 4.6%, and KBW’s index of regional lenders rose by 4.7%.

Some investors, such as hedge fund billionaire Bill Ackman, have warned of more impending losses, but others believe the market had taken a “draconian view of banks’ capital and operating models.” Bloomberg Intelligence analyst Herman Chan said the tension between poor market sentiment and strong liquidity at regional banks was challenging to reconcile.

However, this end-of-week rally may be causing some trouble for short-sellers seeking profits from a continued regional-bank downturn. Wells Fargo banking analysts, led by Mike Mayo, pointed to various have identified several reasons for the short-covering rally, including potential government interventions like increasing guarantees for deposits and imposing temporary limits on short selling.

Larry Norris

Larry Norris is a journalism graduate with keen interest in covering news – specifically top trending. He has as a keen eye for technologies and has predicted quite a few successful startups over the last couple of years. Larry goal with this website is to report accurately on all kinds of stock news, and have a great deal of passion for technical and active reporting. Larry is diligent and proactive when it comes to news reporting.

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