PacWest Stock Soars 80% in Volatile Week for Banking Sector

Highlights

• PacWest shares were up more than 80% on Friday but remain lower for the week.
• The U.S. SEC is probing First West for possible insider trading, according to reports.
• The broader stock market is rallying on positive economic data and tech earnings.

After a tumultuous week for bank stocks, PacWest stock is trying to crawl out of the abyss. Bank stocks have become among the most volatile sectors in the market, revealing the uncertainty that continues to grip the U.S. financial system. 

PACW shares rose more than 80% on Friday, taking the stock to around $5.78 after contagion fears sent it spiraling earlier in the week.

Nevertheless, PacWest is still headed for a weekly decline of about 65% after signs the bank could be headed for the same fate as Silicon Valley Bank or First Republic. 

Broader Bank Sell Off 

PacWest’s stock market recovery spread to its peers in the regional banking sector, buoying stocks like Western Alliance and Zion’s Bancorp, which are up 37% and 17%, respectively, on Friday. 

Investors got spooked this week after PacWest revealed that it was exploring its strategic options, including a possible sale. Shareholders found little solace in reassurances that PacWest has not experienced the same type of bank runs that rocked First Republic and Silicon Valley Bank before they were rescued. 

Now that First Republic has been bailed out, including a sale of the majority of its assets to JPMorgan, more details are coming to light. The U.S. SEC has launched a probe into First Republic for possible insider trading leading up to its sale to JPMorgan, according to a Bloomberg report.

Members of the bank’s C-suite reportedly unloaded millions of dollars worth of shares just before First Republic was rescued. Regulators are similarly investigating potential insider trading at Silicon Valley Bank, whose failure ignited the crisis of confidence in the banking industry.  

Broader Market Rally

Regional banks were lifted by a broader rally in the stock market, fueled by a solid jobs report for April and Apple’s better-than-expected quarterly results fueled by strong iPhone sales.