What happened
Comerica (CMA +0.00%) stock jumped on Friday, rising about 5.8% as of 12:30 p.m. ET. It had been up as much as 6.5% on the day. The stock was trading at about $40 per share, down about 39% year to date.
The markets were climbing on Friday as the S&P 500 was up 56 points (1.3%), the Dow Jones Industrial Average jumped 619 points (1.9%), and the Nasdaq Composite gained 120 points (0.9%) as of 12:30 p.m. ET.
So what
A news report on Monday by American Banker about Comerica's alleged violations of compliance requirements for the U.S. Treasury's Direct Express program sent the stock price tumbling earlier this week.
NYSE: CMA
Key Data Points
More bad news followed, not specific to Comerica, but to regional banks in general, as the Federal Deposit Insurance Corp. (FDIC) came out with a report that said U.S. banks lost $472 billion, or 2.5% of total deposits, in the first quarter. It was the largest quarterly drop since the FDIC began tracking this data in 1984.
But Comerica's stock price has climbed higher the past two days as investors perhaps saw an opportunity to get a solid regional bank stock at a near rock-bottom valuation.
Now what
It was also a good day for the market overall, and bank stocks in particular, as the approval of the debt ceiling bill in both houses of Congress may have alleviated fears of an economic downturn, at least for now.
Also, a strong jobs report buoyed markets, with 339,000 jobs added in May. However, the unemployment rate went up to 3.7% from 3.5%, due to a drop in self-employment jobs. Also, wages increased by less than anticipated. Some investors may have seen the latter two data points as a sign that the Fed could start easing.
But as far as Comerica is concerned, it should start gaining momentum as it had a good first quarter and is trading at an extremely low valuation. Stay tuned to second-quarter earnings, as this is a solid regional bank stock to keep an eye on.
