Why Western Alliance And PacWest Bancorp Shares Are Surging Today

Western Alliance Bancorp WAL and PacWest Bancorp PACW shares are on the move Tuesday as part of what appears to be a relief rally in the financial sector as several bank names bounce back after facing heavy selling pressure over the last few trading sessions.

What Happened: Several banks sold off following the collapse of SVB Financial Group SIVB last week, which sparked broader contagion fears.

SVB was forced to sell some of its longer-term treasurys at a loss and propose a public offering to cover increased withdrawal requests, which resulted in a bank run that ultimately led to the biggest banking collapse since the 2008 financial crisis.

Everything You Need To Know: Why Silicon Valley Bank Collapsed: A Simple Explainer

The Fed stepped in to inject liquidity into the situation over the weekend and announced plans to create a new Bank Term Funding Program centered around protecting institutions.

The move simply aimed to build back confidence in the banking system, Fed Chair Jerome Powell, Treasury Secretary Janet Yellen and FDIC Chair Martin Gruenberg said in a joint statement. 

"The U.S. banking system remains resilient and on a solid foundation, in large part due to reforms that were made after the financial crisis that ensured better safeguards for the banking industry. Those reforms combined with today's actions demonstrate our commitment to take the necessary steps to ensure that depositors' savings remain safe."

Wells Fargo analyst Timur Braziler maintained Western Alliance with an Overweight rating and lowered the price target from $90 to $65 on Tuesday.

See Also: What's Going On With First Republic Bank Stock Today?

WAL, PACW Price Action: Western Alliance and PacWest traded down more than 60% over the last week before bouncing back on Tuesday.

Western Alliance was up 41.3% at $37.05 and PacWest was up 49.2% at $14.55 at the time of publication, according to Benzinga Pro.

Photo: jenniferfgallagher from Pixabay.