Stock markets got over their case of the Mondays really quick this week, and after regaining all their Monday losses on Tuesday, are roaring even higher as Wednesday gets off the ground.

Financial stocks are doing particularly well this morning. As of 10:20 a.m. ET, shares of Bank of America (NYSE: BAC) are gaining a respectable 2.8%, while JPMorgan Chase (NYSE: JPM) is doing even better with a 3.6% rise, and American Express (NYSE: AXP) is doing best of all -- up 5.4%.

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The American stock market's big news day

What's behind the optimism? President Donald Trump, of course.

After spooking markets earlier in the week with threats to oust Federal Reserve Chairman Jerome Powell, Trump ratcheted back the rhetoric this morning, even going so far as to assure investors he has "no intention" of firing Powell (or at least not until the end of his term of office next May). This promise, for as long as it lasts, may be of particular reassurance to financial investors as they're more closely tied to moves by the Fed than anyone else, and were presumably more worried than others about what political pressure on the Fed might do to interest rate policy.

Meanwhile, in tariffs news, the president held out the prospect of falling tariffs on China, which holds the potential to both reduce strain on the American economy and -- potentially -- short-circuit an incipient global trade war that seemed all but certain to happen as recently as Monday. Both prospects diminish the chance of the U.S. falling into recession this year, and that's music to investors' ears.

Referring to tariffs on Chinese imports that have reached levels capable of potentially ending trade between the two countries entirely, the president opined that once negotiations run their course, tariffs on Chinese goods will probably come down "substantially." Forget 145% tariffs. They soon "won't be anywhere near that high."

Image source: Getty Images.

Is it time to buy bank stocks?

Worries over tariff policy, and the recession risk they raise, have been especially concerning to the banking and credit card industries, reports The Wall Street Journal. As recently as this morning, that paper reported on how credit card companies are bracing for an economic downturn in which consumers stop spending because imported goods have become simply too expensive to buy.

All three of the banks named above were cited in the story, with Amex in particular warning that "consumers are holding off on nonessential splurges" and JPMorgan said to be ratcheting up reserves against an expected recession. The good news is that BofA says consumers are, for now, "still solidly in the game," however. And if Trump ends up calling off his trade war in time to avert a recession, things could turn out as well as investors today seem to feel they will.

Potentially, this could all work out very well indeed for investors brave enough to roll the dice at today's better-than-Monday, but still depressed, valuations. American Express stock is now trading for an unchallenging 17.6 times trailing earnings, while Bank of America and JPMorgan stocks look downright cheap at 11.4 and 11.6 times earnings, respectively.

Of the three, I personally prefer BofA and JPMorgan over Amex, though. Not only are their valuations more attractive, but JPMorgan also pays a 2.4% dividend yield, and BofA 2.7% -- both twice the dividend yield on Amex stock. If you're in the mood to do some bank stock shopping today, I'd start with those two.

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American Express is an advertising partner of Motley Fool Money. Bank of America is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bank of America and JPMorgan Chase. The Motley Fool has a disclosure policy.

It might sound strange at first, but stablecoins are soaring these days.

I don't mean that the price of Tether (CRYPTO: USDT) or USD Coin (CRYPTO: USDC) is skyrocketing, of course. They are going nowhere from that perspective, essentially pinned to the $1.000 price point as expected. But the entire category of stablecoins is gaining momentum, with lots of new names on the market and a rising tide of trading volumes.

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So let's look at the surging stablecoin category. The calmest corner of the cryptocurrency market can be surprisingly exciting.

What makes stablecoins so... stable?

First, let's think about what stablecoins are good for.

These digital coins have several functions in the crypto world.

With a price permanently pegged to a traditional fiat currency such as the US dollar, the euro, or the Japanese yen, they are a helpful tool for crypto-trading exchanges and banks. Exchanging dollars for Tether or USD Coins is very straightforward, and then you have a crypto-based representation of simple dollars in your digital assets account. From there, you can use the stablecoins to buy other cryptocurrencies, without raising currency exchange questions by involving actual dollars again.

The leading names have become extremely stable over time. Tether prices fluctuated wildly in 2016, ranging from $0.10 to $2.01 when the very concept of stablecoins was new and unproven. The newer USD Coin had a lighter bout of volatility just after its launch in 2018, rising as high as $1.04. But Tether quickly stabilized and hasn't moved more than 1.1% away from a perfect $1.00 in the past five years. USD Coin took a quick 3.4% dip amid the collapse of the experimental Terra stablecoin in 2023.

Any respectable stablecoin looks like a straight horizontal line next to the S&P 500 (SNPINDEX: ^GSPC) stock market index, other cryptocurrency prices, or any other fluctuating economic data point. Here's a five-year stablecoin vs. S&P 500 chart for your amusement. The big blip of USD Coin uncertainty in 2023 is barely visible:

Tether Price data by YCharts

Beyond Tether: The expanding stable of stablecoins

Tether was the first name in the stablecoin game, and it's still the largest and most widely used option. It's essentially your only choice if you want to use a stablecoin that is independent from specific crypto exchanges.

USD Coin was launched by a group including Coinbase (NASDAQ: COIN). It's no surprise to learn that Coinbase defaults to using USD Coin across its trading platforms. That's not the only place you can buy, sell, and hold USD Coin, though. Every major crypto exchange supports it, and there are far more USD Coin transactions on Binance than on Coinbase.

The Sky.money crypto-trading platform is an interesting case. Coinbase launched the USD Coin, but Sky.money worked the other way around. This system started with the USDS (CRYPTO: USDS) stablecoin, formerly known as Dai and Maker. The rest of the trading platform was built around the quirks and requirements of USDS. Sky.money may not ring a bell, but USDS is the third-largest stablecoin by market cap.

And there are many more. For example:

• The Ripple Foundation launched a Ripple USD (CRYPTO: RLUSD) stablecoin in December, basing the coin on US dollars and the XRP (CRYPTO: XRP) cryptocurrency. This coin is helping Ripple's payment services execute international money transfers, serving as a super-liquid pool of cash-backed assets.
• The Tether Holdings group could soon introduce a second version of the Tether coin, specifically aimed at large institutional investors in the United States.
• And this could be the start of a large trend. Asset manager giant Fidelity Investments is planning a stablecoin. Even larger firm Blackrock (NYSE: BLK) introduced one in March 2024. Even Bank of America (NYSE: BAC) is open to the idea of an in-house stablecoin, depending on how American regulations will shape up around this opportunity.

So the stablecoin legion is growing larger and more diverse.

Stablecoin trading volumes speak volumes

Whether you're looking at Tether, USD Coin, or USDS, their average daily trading volume has been bubbling up over the last two years.

Tether's average transaction volume stood at $19 billion in early April 2023. Now it's up to $182 billion per 24 hours. USD Coin's volume rose from $6 billion to $28 billion over the same period. The Dai/USDS ecosystem surged from $130 million per day to $2.7 billion.

This is more than empty talk. People (and automated trading algorithms) are putting these stablecoins to work. In all fairness, the rising interest applies to non-stablecoin cryptocurrencies, too. Bitcoin's daily trading volume is up from $9.4 billion to $101 billion, for instance. But the stablecoin community is taking advantage of broader public crypto interests.

More than just trading tools

Stablecoins can do more than just facilitate trades between fiat currencies and cryptocurrencies. Their powers are growing over time, since every new stablecoin option wants to win customers and usage with their unique features.

Some of them offer generous interest rates, putting most savings and money market accounts to shame. The spare cash in my Coinbase account is earning an annual percentage yield (APY) of 4.1% right now. That's comparable to the best money market yields on the market today.

A few stablecoins rely on a specific blockchain system, like the XRP-based Ripple USD coin. Others pick a proven coin-launching foundation such as Ethereum (CRYPTO: ETH) or Solana (CRYPTO: SOL), depending on their technology to provide data security and smart contract functions. And then there's Tether, which provides transparent support for more than a dozen blockchain networks. That's a diverse approach, protecting Tether holders against platform-specific risks. Tether can always untether itself (har-de-har-har) from any risky or flawed solution, relying on a dozen alternatives instead.

So you see, there's plenty of buzz in the stablecoin sphere right now. There are plenty of alternatives for good reason. These mega-stable coins (often with lucrative yield rates) may look especially attractive when the broader crypto market is experiencing wild volatility, like this week.

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Bank of America is an advertising partner of Motley Fool Money. Anders Bylund has positions in Coinbase Global, Ethereum, Solana, and XRP. The Motley Fool has positions in and recommends Bank of America, Coinbase Global, Ethereum, Solana, and XRP. The Motley Fool has a disclosure policy.