U.S. Bank Stocks Hammered as Coronavirus Spreads
February 27 2020 - 5:23PM
Dow Jones News
By Ben Eisen
Shares of global banks fell into correction territory this week,
reflecting fears that financial institutions could take a hit if
the coronavirus c ontinues to spread.
The KBW Nasdaq Bank Index, a benchmark based on shares of 24
banks, is down roughly 18% from its peak in early January,
including a 4.2% decline Thursday. The S&P 500 financial sector
is on pace for its worst week since 2009.
Bank stocks typically go up and down with expectations for the
economy, effectively serving as bets on U.S. and global economic
growth. As the virus spreads, some fear that efforts to stop it --
quarantines, travel bans and widespread business closures -- could
weigh on consumer and business spending.
Shutdowns in some supply chains could crimp manufacturing
production. That could hurt global banks such as Citigroup Inc. and
JPMorgan Chase & Co., which move money around the world for
multinational corporations. Citigroup fell 5.5%, while JPMorgan was
down 4.2%.
"Risks are probably more skewed to the downside, particularly in
the near term given uncertain factors like the coronavirus,"
JPMorgan Chief Financial Officer Jennifer Piepszak told investors
this week, referring to the economy.
Shares of Bank of America Corp. fell 4.9% amid speculation that
the Federal Reserve could continue to trim interest rates to combat
any economic slowdown spurred by the virus. Bank of America is
especially sensitive to changes in U.S. rates because of its large
base of U.S. deposits.
Wall Street had largely ignored the coronavirus as it spread
through China, but investors began selling stocks of all stripes in
recent days following reports that the virus has spread to other
countries, including in Western Europe.
Some financial firms have already reported impacts from the
virus. On Monday, Mastercard Inc. lowered its revenue projections
for the first quarter because of declines in cross-border travel
and e-commerce.
Banks, along with other companies, have taken additional
precautions to prevent the spread of the virus among staff. Goldman
Sachs Group Inc., for example, halted business travel to South
Korea and parts of Italy, where the virus is spreading. The bank
has already cut off travel to China.
Goldman Sachs Group dropped 4.7% and Morgan Stanley fell 3.9%.
Wells Fargo & Co. slid 3.8%.
Write to Ben Eisen at ben.eisen@wsj.com
(END) Dow Jones Newswires
February 27, 2020 17:08 ET (22:08 GMT)
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