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.
Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Friday, May 27, 2016. U.S. stocks edged higher, with the S&P 500 on course for its biggest weekly advance since March, while investors awaited remarks from Federal Reserve Chair Janet Yellen for hints on the timing of the next interest-rate increase. Photographer: Michael Nagle/Bloomberg
Michael Nagle/Bloomberg
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.
Federal Reserve Gov. Stephen Miran reiterated his view that monetary policy has become more restrictive than economists think, but expressed increased urgency that the central bank take strong corrective action.
The megabank laid out a series of changes, including the impending departure of its CFO and other executive changes related to a revamp of its U.S. personal banking line of business.
The Consumer Financial Protection Bureau plans to transfer its entire enforcement and legal divisions to the Department of Justice and will furlough almost all staff in those units, according to sources briefed by agency leadership.
Supplies of the one-cent coin are plummeting. Businesses can't give exact change. Banks are struggling to resupply them. And amid it all, the federal government has said almost nothing.
