Everyone is clamoring for a piece of U.S. banks.
Investors, eager to get exposure to an economic recovery, are pouring into bank stocks like never before, putting the stocks on track for what could be their best year on record compared with the S&P 500. Bank of America Corp. and JPMorgan Chase & Co. recently issued gigantic bonds that rank as the two largest single bank deals in history, turbocharging a big year for financial debt issuance.
After years of underperformance since the 2007-08 financial crisis, and a particularly brutal 2020, longtime bank investors are feeling some long-awaited validation. Analysts say the stocks remain cheap, and many shareholders view them as a relatively safe investment that grows along with the economy.
The KBW Nasdaq Bank Index is up about 37% this year, while the S&P 500 is up 11%. Smaller regional banks are doing even better, with the KBW Nasdaq Regional Banking Index up 38%. Last year, the big-bank index fell nearly 14%. It underperformed the S&P 500 by 30 percentage points, even worse than its showings in 2007 and 2009.
About $32 billion has been poured into broad financial stocks this year, according to Bank of America strategists, already setting a full-year record in less than five months.