US Bank Stocks Are Falling

Some of the largest banks in America are seeing their shares fall sharply following a brief overperformance rally, with shares of Goldman Sachs Group (GS) clawing back almost all of their losses from earlier in the year.

By Tuesday afternoon, Bank of America (BAC) shares had fallen 5.5%, at $32.57, the lowest price since mid-October. Shares of the north Carolina-based bank have dropped almost 10% between Monday and Tuesday, making for the worst weekly drop since June of 2020.

Goldman Sachs Group Inc., JPMorgan Chase & Co. (JPM), Wells Fargo Inc. (WFC), Morgan Stanley (MS), and Citigroup Inc. (C), all saw intense downward movement on Monday and Tuesday, leaving them heading for their biggest weekly drops since September, after only the first two days of the week.

The Financial Select Sector SPDR Fund exchange-traded fund (XLF), was hit hard by the weakness in the sector, falling over 4% over those two days. It is also heading for its worst weekly loss since September.

Analysts pointed to new rounds of layoffs at Morgan Stanley Inc., as Bank of America announced it would slow hiring.

Meanwhile chief strategist at Interactive Brokers Steve Sosnick pointed to the continued inversion of the Treasury yield curve, noting it “is not great for banks that borrow short and lend long, even if the high fed-funds rate benefits banks that don’t pass along that benefit to their depositors.”

The 2-year and the 10-year Treasury yield spread fell to as low as minus 86 basis points at one point Tuesday, which was the most inverted the spread has been since 1981.

Also not helpful has been the dour commentary during a conference hosted by Goldman Sachs on Tuesday. In addition, during an interview with CNBC, JPM CEO Jamie Dimon also went into his views on the likelihood of a recession in the US next year.

The Daily Financial Trends