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.
At a time of mild or nonexistent loan growth, middle-market borrowers in the Lone Star State are providing a boost to Fifth Third Bancorp and Huntington Bancshares.
New details have emerged about the negotiations that culminated in Capital One's blockbuster $35 billion agreement to acquire Discover. At one point last December, the two parties broke off discussions, according to a securities filing.
According to the Federal Reserve Board's latest financial stability report, persistent inflation and policy uncertainty are the primary worries for banks. Survey respondents expressed heightened anxiety over murky policy outlooks due to geopolitical turmoil and rapidly approaching domestic elections.
The Alabama regional lender says it expects expenses to taper off this year and anticipates challenged loans will gradually rise to historically average levels.
Truist Financial's top executive leadership team announces departures; First Horizon's chief credit officer is retiring; Ferry teams with Highnote to roll out a new Visa-branded payroll card; and more in the weekly banking news roundup.
The Dallas-based regional bank tapped a client for its co-pilot capabilities, where employees can message a bot instead of a human to get tech assistance.