The stock market was having a pretty strong day on Tuesday, with the Dow Jones Industrial Average and S&P 500 higher by 1% and 0.6%, respectively.
Wells Fargo (NYSE:WFC) was a standout, with shares higher by 6% as of 2:30 p.m. EDT. And the reason wasn't because of earnings like many other stock moves we're seeing today. Rather, Wells Fargo made a major change to its management team.
The big news with Wells Fargo today is that longtime CFO John Shrewsberry will be retiring this fall and will be replaced by former Bank of New York Mellon (NYSE:BK) CFO Mike Santomassimo.
In a nutshell, Shrewsberry represents the last major piece of Wells Fargo's executive team that was in charge during the infamous fake accounts scandal and the numerous other scandals that have plagued Wells Fargo over the past few years.
Finding ways to cut expenses is a major priority of new CEO Charlie Scharf, and Santomassimo has an excellent track record of doing just that at BNY Mellon (where Scharf was formerly CEO). Scharf has said that Wells Fargo needs to cut about $10 billion in expenses annually to compete with other big banks, and this move could be a step in the right direction.
Wells Fargo is likely to be one of the big banks most affected by the COVID-19 pandemic, as it is mainly focused on the commercial side of the business and is rather susceptible to loan losses in bad economies. So, the introduction of a CFO who has previous success with cost-cutting initiatives and the completion of the overhaul of Wells Fargo's scandal-era management team seem to be giving investors renewed hope for the future.