After news of its phony accounts scandal broke in August, Wells Fargo’s stock got a long drag through the mud. But with expectations of a presidency that will be much friendlier to the financial industry, investors are finally beginning to show a little forgiveness.
Shares of Wells Fargo (WFC) closed up 7.6% Thursday, to their highest point since January—long before news of its 2 million fake accounts reached consumers. That also pushed Wells Fargo’s market cap to $263.3 billion.
Wells led led bank stocks as the overall financial sector got a boost from president-elect Donald Trump’s win. An exchange-traded fund tracking the performance of financial sector stocks, the Financials Select Sector SPDR Fund (XLF), rose 3.7% Thursday.
The jump in bank stocks comes as markets absorbed the surprise of Trump’s win—most on Wall Street had anticipated Hillary Clinton would take the White House, leading to further restrictions on Wall Street. Conversely, Trump has promised to dismantle the Dodd-Frank financial reform law enacted after the financial crisis and pull back Department of Labor fiduciary rules that require those who give retirement advice to act in their client’s best interest.
“We think the main result of Donald Trump’s election will be that Trump will be able to appoint regulators who are more industry friendly than regulators appointed by President Obama,” Brian Gardner, head of Washington research at Keefe Bruyette and Woods, wrote in a Wednesday vote. “The regulatory implications are more important than what might come out of Congress but are broadly positive for financials in our view.”
Wells Fargo could still face another $1.7 billion in legal fees as a result of ongoing litigation from opening the deposit and credit card accounts between 2011 and 2015.