Banks stocks gain after US Congress averts historic debt default

June 2 (Reuters) – Shares of U.S. banks rose on Friday after the U.S. Senate on Thursday passed bipartisan legislation that lifted the government’s $31.4 trillion debt ceiling and averted a historic default.

Shares of JPMorgan Chase & Co (JPM.N), Goldman Sachs (GS.N), Morgan Stanley (MS.N), Citigroup (C.N), Wells Fargo (WFC.N) and Bank of America (BAC.N) gained between 2.2% and 3.8%

Their mid-sized counterparts, Charles Schwab (SCHW.N), PNC Financial (PNC.N), Regions Financial (RF.N), US Bancorp (USB.N), and PacWest Bancorp , gained between 2.9% and 12%.

Meanwhile, a key jobs data on Friday highlighted a cooling in wage inflation that reinforced bets that the central bank will steer clear of a rate hike this month.

Fed funds futures trading showed an over 70% probability that the Fed will hold interest rates steady at its June 13-14 policy meeting.

Banks stocks typically fall out of favor after expectations of rate hikes are lowered because their profits take a hit when interest rates dwindle.

Reporting by Mehnaz Yasmin in Bengaluru; Editing by Anil D’Silva

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