JPMorgan and BofA Rally After Iowa Caucus Chaos Signals Trump Strength
JPMorgan and BofA Rally After Iowa Caucus Chaos Signals Trump Strength
(Bloomberg) -- Bank stocks rallied on Tuesday after chaos in the Iowa caucuses signaled a boost to President Donald Trump’s chances of re-election. A Trump victory is viewed as better for financial services companies like big banks than a win by either a moderate or progressive Democrat.
The KBW Bank Index gained as much as 2.3%, the most since mid-December. Shares of JPMorgan Chase & Co. rose as much as 2.4%, Bank of America Corp. gained 2.5% and Citigroup Inc. added 2.4%. Morgan Stanley and Goldman Sachs Group Inc. also rose. U.S. stocks rallied across the board as investors speculated the global economy can withstand the impact from the coronavirus after China’s market sell-off eased.
An attempt to modernize the Iowa race instead devolved into political difficulties for the Democratic party, which indicated results may be released sometime Tuesday but gave no firm time-line.
“The only clear winner last night was President Trump as the Democratic party stumbled right out of the gate,” Compass Point’s Isaac Boltansky said via email. “The juxtaposition of disarray in Iowa and the president delivering the State of the Union address is devastating for Democrats.”
“Iowa winners include those who didn’t play: Trump and Bloomberg,” Cowen’s Chris Krueger wrote in a note. Michael Bloomberg, the founder and majority owner of Bloomberg LP, the parent company of Bloomberg News, is seeking the Democratic presidential nomination. “The Trump Tweets write themselves,” Krueger added. “You want to take over the economy and you can’t run a caucus?”
“The probability of the Democrats winning the election is trending steadily lower,” RBC currency strategist Adam Cole wrote in a note. He also flagged Trump’s upcoming Tuesday night State of the Union address, which will likely focus on “the great American comeback,” with a “vision of ‘relentless optimism.”’
Investors had been watching the Iowa caucuses for signs of how well a surging Bernie Sanders would end the night. So far, markets had largely shrugged off the ramifications of a potential Sanders win, but concern about the senator’s plans for health care, banks and private equity might have risen if Sanders were to have emerged with unexpected strength, analysts said.
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, Kristine Owram
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