Shares of many of America’s largest banks are falling sharply this week after a period of outperformance that saw Goldman Sachs Group GS,
Shares of Bank of America Inc. BAC,
Shares of Goldman Sachs Group Inc. JPMorgan Chase & Co. JPM,
Weakness in bank shares hit the Financial Select Sector SPDR Fund exchange-traded fund XLF,
Market strategists highlighted news of layoffs at Morgan Stanley Inc. and Bank of America’s decision to slow hiring, while Steve Sosnick, chief strategist at Interactive Brokers, said the continuing inversion of the Treasury yield curve “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 selloff comes as investors have heard commentary from several megabank CEOs during a conference hosted by Goldman Sachs on Tuesday. Earlier, JPM CEO Jamie Dimon also spoke about the risk of a recession in the U.S. next year during an interview with CNBC.
The spread between the 2-year yield TMUBMUSD02Y,
The stock and bond market could handle a much more aggressive Fed than expected, JPMorgan strategists argue.
Joseph Adinolfi is a markets reporter at MarketWatch.
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