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Shares of major banks climbed on Wednesday as investors look toward Donald Trump’s victory in the presidential election and bet it will lead to less regulation for the sector.
Citigroup jumped about 8% in premarket trading. Bank of America added 8%, while Wells Fargo and Goldman Sachs each popped 8% and 7%.
Former President Donald Trump gained a solid lead over Vice President Kamala Harris into the early hours of Wednesday and solidified his second term with a win in the swing state of Wisconsin, per NBC News’ projection.
Bank stocks are expected to benefit under GOP control given the party’s posture toward deregulation. TD Cowen analyst Jaret Seiberg noted a pullback on Consumer Financial Protection Bureau oversight can particularly benefit finance names.
“Donald Trump is the candidate where you ignore what he says and focus on what you expect him to do,” Seiberg wrote in a note to clients recently. “It is why he offers the promise of deregulation for financials as his regulators are likely to roll back much of the CFPB enforcement agenda and rethink safety and soundness changes for big banks.”
Seiberg said trading banks can specifically gain given the likelihood of lower capital requirements, credit card late fee policies remaining and help on crypto regulations. But he warned that there’s downside risk tied to Trump’s plans for tariffs and deportations, which can said could be inflationary.