Regional bank ETF’s massive July jump marks its strongest month since 2016 after rough ride in 2023

Regional bank stocks were battered earlier in 2023 after the sudden collapse of Silicon Valley Bank. The failure sparked concern over potential bank runs elsewhere in the regional banking system, with the Federal Reserve swooping in to quell those fears in March with an emergency lending program. 

The Fed’s program shored up confidence in the system, making additional funding available to help assure banks could meet the needs of all their depositors. The SPDR S&P Regional Banking ETF tumbled almost 29% in March and continued to slide the next two months before beginning to bounce back in June. 

The recovery picked up steam in July after banks this month reported their latest quarterly earnings and the S&P 500 extended its rally amid a resilient U.S. economy. The Invesco KBW Bank ETF
KBWB,
+0.44%,
a fund providing broad exposure to the U.S. banking market, and the SPDR S&P Bank ETF
KBE,
+0.05%,
which tracks an equal-weighted index of banking equities, have also soared this month.

But like the SPDR S&P Regional Banking ETF, the funds remain down so far in 2023. 

Shares of the Invesco KBW Bank ETF have sunk 11.3% so far in 2023, while the SPDR S&P Bank ETF has slid 7.1% and the SPDR S&P Regional Banking ETF has dropped 17.1%, according to FactSet data. 

Broader stock-market indexes finished modestly higher Monday, bringing the S&P 500’s
SPX,
+0.15%
gains in July to 3.1% for a year-to-date climb of 19.5%.

Meanwhile, investors were digesting the Fed’s senior loan officer opinion survey, which was released at 2 p.m. Eastern Time on Monday. The survey of banks gives markets a reading on lending conditions in the U.S. as well as loan demand from households and businesses.