Banks Rise, Fintechs Slip Amid Yield Gain, Barclays Event

(Bloomberg) -- Bank stocks on Monday rose to the highest since early August as the yield on 10-year Treasuries topped 1.6%. Optimism about trade boosted stocks earlier, as Treasury Secretary Steven Mnuchin said that the U.S. and China have made “lots of progress” on talks.

The KBW Bank Index rallied as much as 3.6%, led by trust banks BNY Mellon Corp. and State Street Corp., as well as M&T Bank Corp., Huntington Bancshares Inc., and Citigroup Inc., many of which were due to make management presentations Monday at the three-day annual Barclays financial services conference, and all of which rose more than 4% in afternoon trading.

The S&P 500 financials index lagged banks, gaining only as much as 1.7%, as some technology-oriented companies, exchanges and ratings agencies fell. Leading decliners included MarketAxess Holdings Inc., which fell as much as 12%, the most since 2012. Other falling stocks: CME Group Inc., S&P Global Inc., Intercontinental Exchange Inc., and MSCI Inc. Visa Inc. and Mastercard Inc. were also both down more than 3%.

Investors may have had a low bar for the Barclays event. The estimate bias for banks’ third-quarter earnings-per-share has “typically been lower” post-conference, and this year should be “no different,” given the change to the interest rate backdrop since second-quarter earnings conference calls, Barclays analyst Jason Goldberg wrote in a note last Wednesday.

On Monday, Wells Fargo cut its net interest income forecast, while Comerica Inc. in slides on Friday warned of higher deposit costs. Both underperformed peers on Monday, with Wells Fargo up as much as 2.8% and Comerica adding 2.9%. Citigroup said it wasn’t seeing material concerns in its consumer card book, and that it now sees net interest revenue increasing 3%-4%.

Wells Fargo “guiding down of expectations yet again sets the tone for bank guidance in the coming days, widely expected to reduce expectations through end of this year,” Bloomberg Intelligence’s Alison Williams said. “Given the rate environment, some could come in worse.”

Banks have underperformed so far this year, with the KBW Index up about 14%, versus a gain for the S&P 500 of 19%.

To contact the reporter on this story: Felice Maranz in New York at fmaranz@bloomberg.net

To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Scott Schnipper

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