Shares of many of America’s biggest banks fell sharply this week after a period of outperformance that saw Goldman Sachs Group
GS,
recovered virtually all of its losses from earlier in the year.
Shares of Bank of America Inc.
BAC,
shares fell 5.5% on Tuesday afternoon to $32.57, their lowest level since mid-October. Between Monday and Tuesday, shares of the North Carolina-based lender fell nearly 10%, leaving them on track for their worst weekly decline since June 2020, according to FactSet data.
Shares of Goldman Sachs Group Inc. JPMorgan Chase & Co.
JPM,
Wells Fargo Inc.
WFC,
Morgan Stanley
MISS,
and Citigroup Inc.
°C,
also suffered heavy selling on Monday and Tuesday, leaving them on track for their biggest weekly decline since September, just two trading days into the week.
Weakness in bank stocks hit the Financial Select Sector SPDR Fund exchange-traded fund
XLF,
which has fallen more than 4% over the past two days, also putting it on track for its biggest weekly decline since September.
Market strategists highlighted news of layoffs at Morgan Stanley Inc. and Bank of America’s decision to slow hiring, while Steve Sosnick, chief strategist at Interactive Brokers, said the continued inversion of the Treasury yield curve “isn’t great for banks that borrow short and lend long , even if the high federal funds rate benefits the banks, which do not pass that benefit on to their depositors.”
The sell-off comes after investors heard comments from several megabank executives at a conference hosted by Goldman Sachs on Tuesday. Earlier, JPM CEO Jamie Dimon also talked about the risk of a US recession next year during an interview with CNBC.
The spread between the 2-year yield
TMUBMUSD02Y,
and 10-year yield
TMUBMUSD10Y,
shrank to minus 86 basis points at one point on Tuesday, the most reversed level since 1981.