Banking stocks were rising Wednesday as Democratic challenger Raphael Warnock beat the Republican incumbent, Kelly Loeffler, in Georgia, opening up the possibility of a Democratic takeover of the U.S. Senate.
Shares of JPMorgan Chase & Co. (JPM) - Get Report were up 4.6%, while Bank of America (BAC) - Get Report was up 7.1%, Citigroup (C) - Get Report rose 6.4%, and Wells Fargo & Co. (WFC) - Get Report was up 7.6%
Analysts believe that a Democratic majority in the Senate would give President-elect Joe Biden more freedom to enact such policies as more pandemic aid, increased government spending and support for renewable energy. More stimulus spending can be good for banks and their customers, while higher interest rates that result from more spending and borrowing can be good for lenders, too.
Warnock's fellow Democrat, Jon Ossoff, held a narrow lead over his Republican challenger, incumbent David Perdue, as of Wednesday morning.
Ossoff, who was leading Perdue by about 16,000 votes in the Georgia runoff, claimed victory Wednesday morning, according to several media reports.
"It is with humility that I thank the people of Georgia for electing me to serve you in the United States Senate," Ossoff said in remarks on Wednesday morning, according to National Public Radio.
However, Perdue, whose Senate term expired earlier this week, has not conceded the race.
An Ossoff victory would result in a 50-50 seat tie between the two parties in the upper chamber, with Vice President-elect Kamala Harris holding the tie-breaking vote.
In addition, Deutsche Bank named Bank of America a “top pick,” based on a positive outlook for bank stocks in general and the idea that BofA has strong cost controls, solid capital returns and other positive factors.
Deutsche Bank analyst Matt O'Connor raised the firm's price target on Bank of America to $35 from $30 and keeps a buy rating on the shares. The analyst remains bullish on the overall bank group into 2021, according to the Fly.
Meanwhile, benchmark 10-year Treasury note yields rose above 1% for the first time in ten months.