BUZZ-Crisis averted: Top US banks surge in 2024 on rate cuts, revival in deal-making

Top U.S. bank stocks surge in 2024, shrugging off a crisis of confidence triggered earlier this year by a surprise loss at Flagstar Financial FLG.N, formerly known as New York Community Bancorp

Investor optimism has been fueled by the U.S. Federal Reserve embarking on its highly-anticipated interest rate-cutting cycle, which is expected to reignite loan growth and ease pressure on commercial real estate

S&P 500 Banks Index .SPXBK - tracking large-cap banks - has soared 32.8% YTD, through previous close, sailing past S&P 500 .SPX, up 25.2%

Bankers also eyeing a recovery in investment banking revenues in 2025 powered by the return of large initial public offerings and multi-billion dollar deals amid hopes of an easier regulatory landscape under President-elect Donald Trump

"The Republican sweep increases the probability of our prior bull case as approvals increase for corporate activity, driving up animal spirits and capital markets volumes," analysts at Morgan Stanley wrote earlier this month

Regulation stabilizes for the first time since the global financial crisis of 2008, the brokerage adds in the 2025 preview note

Biggest U.S. bank by assets JPMorgan Chase JPM.N up ~41% YTD

Bank of America BAC.N and Citigroup C.N up ~30% and ~37% respectively YTD, while Wells Fargo WFC.N has risen ~43%

Investment banking powerhouses Goldman Sachs GS.N and Morgan Stanley MS.N gain ~49% and ~35% each

Banking sector to kick off 2025 with Q4 earnings reports in mid-January with all eyes on outlook for investment banking revival and interest income

(Reporting by Manya Saini in Bengaluru)

((Manya.Saini@thomsonreuters.com))