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U.S. Banks Rally as Holiday Shopping Signals More Consumer Cheer

Felice Maranz

(Bloomberg) -- The biggest U.S. banks, including bellwethers JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc., gained on Thursday as a hearty U.S. consumer continued to signal good news for lenders.

BofA rose as much as 1% to the highest since October 2008 and Citi climbed as much as 1.5% to the highest since January 2018. Other top preformers included Wells Fargo & Co. and the newly combined BB&T Corp. and SunTrust Banks Inc., now known as Truist Financial Corp.

All are exposed to consumers, who seemed healthy as Amazon.com Inc. said its holiday season this year was “record breaking,” and Dow Jones reported retailers fended off an unfriendly calendar to draw more shoppers ahead of the holidays, citing data from Mastercard SpendingPulse.

Analysts have in recent weeks become increasingly optimistic about bank shares, with RBC Capital Markets analyst Gerard Cassidy in a note flagging a strong economy and a “resilient U.S. consumer.” Cassidy expects “beneficial trends” will persist into 2020.

Relative winners among financial stocks Visa Inc. and Mastercard Inc. have been more “growth-y” than banks, BofA’s Savita Subramanian said in a recent interview; that makes them less attractive for 2020, as they’re “already crowded.” On Thursday, Visa rose 0.8%, extending its record high, while Mastercard climbed 0.6%.

Holiday data may be reinforcing takeaways from banks’ third-quarter results, which showed vigorous consumer spending. In October, CEOs including JPMorgan’s Jamie Dimon called the U.S. consumer “healthy,” and BofA got an upgrade on consumer strength. Analysts had also called credit cards a “bright spot” in earnings.

Bank stocks have outpaced the broader market this year, with the KBW Bank Index rallying 33% compared with a 29% gain for the S&P 500. The U.S. benchmark index hit fresh all-time highs on Thursday as stocks rose across the board in holiday-thinned trading.

To contact the reporter on this story: Felice Maranz in New York at fmaranz@bloomberg.net

To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Jennifer Bissell-Linsk

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