The benchmark KBW Bank Index shed as much as 2.4% to the lowest intraday since late May in Thursday trading, as investors assessed the impact from relentlessly climbing Treasury yields. Citigroup Inc. fell as much as 4.6%, the most since July, leading decliners. The banks gauge is well into correction territory, tumbling about 14% since a mid-August peak. It’s gained less than 2% so far this year, trailing the S&P 500’s 11% advance, with Capital One Financial Corp. and Wells Fargo & Co. among the worst performers, each down more than 15%.
Last month was a “September to not remember,” as financials had their worst September since 1990 for relative performance, according to Truist analyst Brian Foran. “This extends a bear market that really stretches back to April 2025 at this point,” he wrote. He noted that “financials relative performance today looks a lot like the Dot Com era.” Foran also said “estimate revisions are actually positive” and “it’s not just financials in the pity party - there is an AI boom and only a few sectors are invited.”
Investors will get more information when big banks earnings season kicks off on Oct. 13, with JPMorgan Chase & Co. and other major lenders due to report. Earlier this week, veteran Wells Fargo bank analyst Mike Mayo said concerns about threats from AI agents, potential fallout from the November midterm elections and rising interest rates had gone too far. The AI “scare trade” will probably reverse when banks report results as “trust at banks is a moat for deposits.”
Source: Bloomberg Markets · Summarized by HeadlinesBriefing