US bank stocks tumble; weak economic data sparks recession fears
Updates with closing prices, adds Morgan Stanley's note in paragraph 16
By Manya Saini and Saeed Azhar
Aug 5 (Reuters) -U.S. bank stocks slumped on Mondayas fears of a recession sent investors fleeing from a sector closely tied to the health of the economy and toward safe-haven assets.
The S&P 500 Banks Index .SPXBK, tracking a basket of large-cap bank stocks, closed down 2.4%, while the KBW Regional Banking Index .KRX fell 2.8%.
Citigroup C.N led big bank losses with a 3.4% fall.
JPMorgan Chase JPM.N fell 2% andBank of America BAC.N declined nearly 2.5%. Goldman Sachs GS.N dropped 2.5%.
Lenders typically feel the squeeze as recessions heighten concerns over credit losses due to higher unemployment. Loan demand - a key factor in profitability - also takes a beating.
"The economy is potentially slowing more than people appreciated, based on last week's economic data, that first and foremost is the biggest driver as it impacts loan growth, income growth, credit quality," said Jason Goldberg, banking analyst at Barclays.
Investors have been jittery since a crisis of confidence hit the sector last year, in part due to higher interest rates, and took down three major regional players.
Among regional banks, CustomersBancorp's CUBI.N shares fell nearly 4.4%, while Huntington Bancshares HBAN.O dropped 3.4%.
"This market volatility, coupled with potential liquidity dislocation, could pose significant challenges for banks, especially in managing funding and liquidity risks," said Moody's Corp's banking analyst Laurent Birade.
The U.S. unemployment rate jumped to a near three-year high of 4.3% in July amid a significant slowdown in hiring, heightening fears the labor market was deteriorating and potentially making the economy vulnerable to a recession.
"It's very normal, especially with interest rates having gone up as much as they have and you're seeing that weakness in the commercial real estate market, to see credit losses normalizing," said Erika Najarian, analyst at UBS.
"The jobs print is essentially saying things are not as awesome as they were, they're not saying that things are terrible."
The economic weakness will likely seep into the sector's outlook after a mixed sector-quarter earnings season, where executives from top U.S. banks remained divided over the Fed's future path on interest rate cuts and flagged deterioration in consumer health.
"This may be a few-day blip. I don't think anybody's ready to call this the beginning of a several-quarter downturn in the markets or the economy," said Stephen Biggar, banking analyst at Argus Research.
Morgan Stanley analyst Manan Gosalia said in a note potential rate cuts will be credit positive for mid-sized banks as it will help reduce funding costs and stimulate loan demand.
The S&P 500 Banks Index is down 9.5% month-to-date, compared with a 6% decline in the benchmark S&P 500 .SPX. The KBW Regional Banking Index .KRX has lost about10% over the same period.
Bank stocks fall amid global equities sell-off https://tmsnrt.rs/3WNVmZw
Reporting by Manya Saini in Bengaluru and Saeed Azhar in New York; Editing by Sriraj Kalluvila and David Gregorio
Actifs liés
Dernières actualités
Avertissement : Les entités de XM Group proposent à notre plateforme de trading en ligne un service d'exécution uniquement, autorisant une personne à consulter et/ou à utiliser le contenu disponible sur ou via le site internet, qui n'a pas pour but de modifier ou d'élargir cette situation. De tels accès et utilisation sont toujours soumis aux : (i) Conditions générales ; (ii) Avertissements sur les risques et (iii) Avertissement complet. Un tel contenu n'est par conséquent fourni que pour information générale. En particulier, sachez que les contenus de notre plateforme de trading en ligne ne sont ni une sollicitation ni une offre de participation à toute transaction sur les marchés financiers. Le trading sur les marchés financiers implique un niveau significatif de risques pour votre capital.
Tout le matériel publié dans notre Centre de trading en ligne est destiné à des fins de formation / d'information uniquement et ne contient pas – et ne doit pas être considéré comme contenant – des conseils et recommandations en matière de finance, de fiscalité des investissements ou de trading, ou un enregistrement de nos prix de trading ou une offre, une sollicitation, une transaction à propos de tout instrument financier ou bien des promotions financières non sollicitées à votre égard.
Tout contenu tiers, de même que le contenu préparé par XM, tels que les opinions, actualités, études, analyses, prix, autres informations ou liens vers des sites tiers contenus sur ce site internet sont fournis "tels quels", comme commentaires généraux sur le marché et ne constituent pas des conseils en investissement. Dans la mesure où tout contenu est considéré comme de la recherche en investissement, vous devez noter et accepter que le contenu n'a pas été conçu ni préparé conformément aux exigences légales visant à promouvoir l'indépendance de la recherche en investissement et, en tant que tel, il serait considéré comme une communication marketing selon les lois et réglementations applicables. Veuillez vous assurer que vous avez lu et compris notre Avis sur la recherche en investissement non indépendante et notre avertissement sur les risques concernant les informations susdites, qui peuvent consultés ici.
