Published on 25 Feb 2024 on Insider Monkey via Yahoo Finance
13 Best Bank Stocks To Invest In For Long-Term
In this piece, we will take a look at the 13 best bank stocks to invest in for long term. If you want to skip our coverage of the banking industry and how it started to trouble investors once again this year, you can take a look at 5 Best Bank Stocks To Invest In For Long-Term.
Due to the current macroeconomic environment, the banking industry in the U.S. and globally has been one of the most important and most watched sectors. This is because right now, apart from artificial intelligence and AI stocks, the Federal Reserve's interest rate policy is a must watch item on the agenda of both retail and professional investors. Investors are wondering when the rates will start to drop. These rate cuts will be quite important for the banking industry as well as for broader sectors such as commercial and office real estate that have struggled in the aftermath of turmoil in the bond market. 2023 was a notable year for bank stocks and it saw a widespread bloodbath in the regional banking sector. Multiple big regional banks failed as they were unable to assess the impact of rising bond yields on their asset bases.
This turmoil resurfaced in 2024 as well. While investors were cheering AI stocks and pumping up the shares of NVIDIA Corporation, the shares of New York Community Bancorp, Inc. (NYSE:NYCB) crashed by 59% in late January and early February after the New York state based regional bank warned in its earnings report that it had to allocate additional capital for trouble in the office real estate sector. Additionally, just as the turmoil in 2023 had prompted the Federal Reserve to step up its efforts at ensuring that the U.S. banking sector was healthy by running stress tests, the NYCB scare of 2024 in the wake of its surprising loss and capital allocation has now spurred the Federal Deposit Insurance Corporation (FDIC), Office of the Comptroller of the Currency, and other banking bodies to inquire from banks whether they are adequately prepared for any untoward events according to media reports. Due to the sizeable role that they play in funding commercial real estate, small banks are quite exposed to jitters in the market, and anyone interested in following bank stocks would also be well advised to watch the commercial real estate sector.