What happened
Investors were bullish on finance industry stocks on Monday, and that sentiment spread into the more specialized fintech sector. Numerous companies in the latter niche enjoyed a nice lift on the first trading day of the week, with Nu Holdings (NU -1.37%) rising by 5.5% and Block (SQ -1.57%) advancing by more than 6%. The reason why wasn't hard to tease out.
So what
The bulls came stomping into the sector because of the latest developments in banking. On Sunday, the Federal Deposit Insurance Corporation (FDIC) announced that acquisitive lender First Citizens Bancshares will be taking over the deposits, loans, and branches of SVB Financial, the parent company of the collapsed Silicon Valley Bank.
The collective sigh of relief from finance sector investors was almost audible. Silicon Valley Bank depositors are being covered, a regulator stepped in quickly and effectively to help prevent its collapse from infecting the wider banking system, and an eager buyer was found for the core assets of the bank.
Calmed and reassured by this, the market grew more positive not just about American banks, but the fintechs looking to either usurp them or to continue being fed by them. Although it's not quite out of the woods yet, it looks as if the banking sector isn't going to melt down in the immediate future.
Now what
Neither Nu Holdings nor Block had any substantial news of their own to report on Monday, so their share price gains were clearly due to the First Citizens/SVB development. No news is probably good news for Block, at least, following the publication last week of a report from an influential short-seller that hammered the company and sent its stock plunging.
