Bank stocks jump almost 12% as traders bet on less regulation in a Trump presidency

Shares of 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.

The SPDR S&P Bank ETF (KBE), which tracks a broad range of financial institutions, rallied nearly 12%. The SPDR S&P Regional Banking ETF (KRE), a fund focused on smaller banks, surged more than 13%. Both touched new 52-week highs.

Wells Fargo and Goldman Sachs each popped around 14% and 13% each. Citigroup and Bank of America each added more than 8%.

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 of America analyst Ebrahim Poonawala called the outcome of the election “positive for bank stocks” in a Wednesday note to clients. Poonawala said to expect a “more balanced regulatory backdrop” that can aid merger-and-acquisition activity.

Bank stocks were 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.

“Populism is usually a threat to big financial firms,” Seiberg said.

The run-up in banks helped the financial sector more broadly outperform. With a climb of more than 6%, the Financial Select Sector SPDR Fund (XLF) touched new all-time highs and notched its best day since 2020.