Financial stocks have been on quite a ride lately, as fears of a banking crisis following the collapse of Silicon Valley Bank and Signature Bank have made investors jittery. Indeed, the Federal Reserve has had to step in and essentially bail out the sector by providing liquidity through a new lending facility.
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Banks borrowed, and the Federal Reserve now has an additional $300 billion added to its balance sheet. However, overall bank deposits at the central bank increased by $440 billion. As Odeon Capital analyst Richard Bove put it, “The rich banks bailed the Fed out.” In fact, the Fed was able to pay down $137.2 billion of its own debt thanks to the influx of liquidity.
Nevertheless, bank stocks are getting hammered today. Of the banks pictured above, US Bancorp (NYSE:USB) is down the most, sliding more than 7%. Conversely, Morgan Stanley (NYSE:MS) is the best performer but is still more than 3% lower on the day.