What happened

Shares of merger partners BB&T (NYSE:BBT) and SunTrust Banks (NYSE:STI) gained 12% and 11.9% in September, respectively, according to data provided by S&P Global Market Intelligence. The banks were helped by a positive turn in economic data that helped ease investor fears about financial stocks, and an optimistic outlook from BB&T's CEO.

So what

BB&T and SunTrust shares have largely traded in tandem since February, when the companies announced plans to combine to become what would be the sixth-largest bank in the U.S.

During the months that followed the deal announcement, bank stocks have frequently come under pressure due to fears the U.S. could be headed toward a recession. That's what happened in August, when financial stocks reacted negatively to an inverted yield curve.

A banker with two customers shakes hands with one.

Image source: Getty Images.

In early September the yield curve normalized, providing some relief to bank stocks. BB&T and SunTrust shares also got a boost from a midmonth presentation by BB&T CEO Kelly King that offered an optimistic outlook for the company.

King said he sees no "cataclysmic" turn to negative rates, an environment that would make it difficult for banks to make money. He said he expects BB&T revenue to be up 2% to 4% in 2019, outpacing expense growth of 1% to 3%, and average loans to be up as much as 4% year over year.

Now what

Shares of both banks are down 4% so far in October, giving up part of their September gains as economic sentiment has again taken a gloomier turn. BB&T and SunTrust should close their merger soon, creating a bank that will be rebranded as Truist Financial, and the tough work of integration will begin.

BB&T is one of the top operators in the sector, and over the long term I expect this company to be a winner for investors. But given the economic uncertainty and the challenges of combining two large banks, investors are likely to be better off watching from the sidelines until some of the dust settles.