Bank stocks tumbled on Monday amid a wider market sell-off as investors were concerned that inflation could lead to higher borrowing costs for companies.
The KBW Nasdaq Bank Index fell 4.91% on Monday. Its components include the largest U.S. banks and regionals such as People’s United Financial and Zions Bancorp.
Wells Fargo shares dropped almost 10% to $57.70. The Federal Reserve slapped the San Francisco bank with an enforcement action last week that bars the company from growing larger; four Wells directors will also be replaced. The sanctions were punishment for Wells Fargo’s fake-accounts scandal and other problems.
In other notable bank stocks, Bank of America fell 5.5% to $30.21; PNC Financial Services Group dropped 4.9% to $150.21; and Capital One Financial fell 4.5% to $96.99.
More than $1 trillion of market capitalization across all sectors was erased on Monday as many investors worried that the market had become overvalued.
“I think sentiment was a little too optimistic," Brad McMillan, chief investment officer for Commonwealth Financial Network, told Bloomberg.
Stocks' performance last week was the worst for markets since 2016, according to Yahoo Finance. The trend continued apace on Monday on extremely high trading volume.
The Dow average fell 1,175 points on Monday, the largest single-day point decline in history, the Wall Street Journal reported. The Dow’s 4.6% slide was its biggest drop since 2011, according to Bloomberg. Earlier in the trading day on Monday, the Dow had dropped as much as 1,500 points. The Dow closed at 24,345.
The S&P 500 Index declined 4.1% in its steepest drop since August 2011. Bitcoin fell more than 20%, sliding below $7,000.
Neel Kashkari, president of the Minneapolis Fed, said in a Monday interview that wage growth has not accelerated enough to support faster rate hikes this year.
After a California woman spent more than a decade obtaining reparations for Nazi plundering of her family's belongings, the money disappeared from her bank account. Her saga highlights a gap in fraud cases between what consumers expect from their banks and what those banks are in a position to deliver.
Federal Reserve Governor Lisa D. Cook highlighted concerns over private credit growth, commercial real estate distress and escalating cyber threats in remarks on financial stability at the Brookings Institution Wednesday.
Consumer debt aggregators such as Method, Payitoff, Spinwheel and Tally are partnering with financial institutions to embed solutions that aggregate account information and devise ways to optimize repayment — including with low-interest offers from the bank itself.
Federal Deposit Insurance Corp. Chair Martin Gruenberg will testify next week in Congress. Those hearings — which will come after the publication of a bombshell report detailing widespread misconduct at the agency — could signal whether he has a future at the FDIC.