Updated from 4:27 p.m. ET with comment from Ron Beasley, and investment advisor in Houston.
NEW YORK (
(MS - Get Report)
was the winner among the largest U.S. banks on Monday, with shares rising over 2% to close at $53.14.
Bank stocks fared even better than the broad market Monday, as investors cheered the withdrawal by former Treasury Secretary Lawrence Summers from consideration to be President Obama's nominee to succeed Ben Bernanke as Federal Reserve chairman.
KBW Bank Index
rose 0.8% to close at 64.17, with all 24 index components showing gains. The
Dow Jones Industrial Average
was up 0.8%, while the
rose 0.6% and the
ended with a slight decline.
Big banks seeing shares rise nearly 2% included
(GS - Get Report)
, which closed at $67.03, and
(WFC - Get Report)
, which closed at $$42.89.
Shares of JPMorgan Chase were up 1% to close at $53.14, after
Wall Street Journal
separately reported that the company would agree to pay fines of "at least" $700 million, springing from the compliance and risk-management failures that led to the "London Whale" hedge trading losses that amounted to at least $6.2 billion during 2012. Both reports cited unnamed sources. JPMorgan CFO Marianne Lake at a conference last Monday said the bank's third-quarter legal expenses could exceed $1.5 billion.
The Journal on Friday reported that JPMorgan's second-half expenses from regulatory expenses
could rise by an additional $4 billion
, including the cost for an additional 5,000 employees "to clean up its risk and compliance problems
The Next Fed Chair
Bernanke's term ends on Jan. 31 of next year, leaving plenty of time for the Senate to confirm a nominee, however, Obama may face difficulty in finding a candidate who can clear the Senate Banking committee, before heading to the Senate floor for a confirmation vote.
Summers has been critical of the Federal Reserve's accommodative monetary policy, while the other highest-profile candidate -- current Federal Reserve System Vice Chair Janet Yellen -- is favored by investors who wish for the central bank to maintain the course it has taken under Bernanke's leadership.
Summers had faced plenty of opposition from Democratic members of the Senate Banking Committee, including Jon Tester (D., Mont.), who had gone on the record saying he was against Summers's potential nomination, and Jeff Merkley (D., Ore.), Sherrod Brown (D.,-Ohio) and Elizabeth Warren (D-Mass.), who were widely expected at least to question the suitability of Summers for the role. Some of the criticism springs from his support of the Commodity Futures Modernization Act of 2000, which
prevented direct regulation of derivatives trading between large banks