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Shares of big U.S. banks jump as Senate approves tax overhaul

Shares of big U.S. banks jump as Senate approves tax overhaul
From Reuters - December 4, 2017

(Reuters) - Shares of the biggest U.S. banks rose on Monday, after the Senate approved a tax overhaul bill on Saturday, raising investor hopes that their earnings would get a boost from asignificantly lower tax bill.

JPMorgan Chase rose 2.4 percent to hit a record on Monday, while Bank of America rose 3.5 percent to its highest since October 2008. Both were the top performers on the S&P 500 Index, which was up 0.7 percent.

Mid-cap and regional banks also gained, with KeyCorp, Citizens Financial and M&T Bank Corp rising almost 4 percent. Zions Bancorp and Comerica Inc rose more than 2.5 percent.

Banks might be the biggest winners from the tax reforms, Michael Mayo, a senior Wells Fargo analyst said.

Of the major S&P sectors, financials pay the highest effective tax rate at 27.5 percent, a Wells Fargo analysis of historical tax rates showed.

The tax cuts could add 16 percent to median bank earnings in 2018 and 18 percent in 2019, said Brian Klock, managing director in equity research at Keefe, Bruyette & Woods, who covers large regional banks.

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