U.S. bank stocks tumbled on Monday as fears of a recession prompted investors to flee a sector closely tied to the health of the economy and into safe haven assets.
Citigroup CN led the big banks with a drop of about 5%. Wells Fargo WFC.N, Morgan Stanley MS.N and Goldman Sachs GS.N each lost about 4%, while JPMorgan Chase JPM.N and Bank of America BAC.N fell 2.7% and 3.5%, respectively.
Lenders typically suffer when recessions raise concerns about credit losses due to rising unemployment, while demand for loans – a key driver of profitability – also suffers.
“The economy may be slowing more than people think, judging by last week’s economic data, which is first and foremost the main driver, as it impacts loan growth, income growth and credit quality,” said Jason Goldberg, a banking analyst at Barclays.
Investors have been on edge since a crisis of confidence hit the sector last year, partly due to rising interest rates, and took down three major regional operators.
Shares of Customers Bancorp CUBI.N fell nearly 6 percent, while Huntington Bancshares HBAN.O fell 4 percent. Banc of California BANC.N, Citizens Financial CFG.N and US Bancorp USB.N all fell between 3.2 percent and 4 percent.
The S&P 500 banks index .SPXBK, which tracks a basket of large-cap bank stocks, was down 3.3 percent, while the KBW Regional Banking Index .KRX was down 3.5 percent.
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Reuters
