US bank stocks hit longest losing streak since 2008
Big US bank stocks are on their longest weekly losing streak since the 2008 financial crisis. The KBW bank index has fallen for six straight weeks. The slide comes even though the biggest banks just reported solid results for the third quarter.
U.S. bank stocks are on their longest weekly losing streak since the 2008 financial crisis, even after the biggest lenders reported sturdy earnings, Yahoo Finance reported Monday.
The KBW Nasdaq Bank Index has fallen for six straight weeks, losing 11% since early September, according to Yahoo Finance data. It slipped again Monday. Bloomberg reported last week that the index was down about 13% from its record in August, putting it in correction territory.
The earnings did not match the gloom. JPMorgan Chase, Bank of America, Citigroup and Wells Fargo together set aside $7.6 billion for bad loans in the quarter, down about 3% from a year earlier, Yahoo Finance reported. Actual loan losses at the four banks fell 5%, while lending grew nearly 10%. That suggests their consumer and business customers are holding up despite high borrowing costs.
Investors are worried about what comes next. In a survey of credit managers at major banks and other financial firms, about 60% said they expect corporate defaults to rise worldwide over the next year, up from 40% in the prior quarter's survey, Yahoo Finance reported. Some companies that have stayed afloat are "beginning to reach the end of the line," said Som-lok Leung of the International Association of Credit Portfolio Managers.
Bloomberg pointed to other worries: a hot inflation reading that raised questions about how hard the Federal Reserve will push, and fears that artificial intelligence could disrupt banking. "Big-bank stocks are facing a confluence of concerns, with a higher-for-longer rate backdrop raising the risk of slower economic growth and higher loan losses," said Bloomberg Intelligence analyst Herman Chan.
The bank index trailed the S&P 500 in 18 of the 21 trading sessions after the Fed's Sept. 16 rate increase, Barclays analyst Jason Goldberg wrote, according to Bloomberg. He said that had never happened in any 21-session stretch since the index began in 1992.
What we know: The bank index has fallen six weeks in a row, its longest weekly slide since 2008.
What we don't: Whether rising rates will lead to the higher loan losses investors fear.
Where outlets agree Yahoo Finance and Bloomberg both report that the KBW bank index's six-week slide is its longest weekly losing streak since 2008, despite bank earnings.
Where they differ The cited reports agree on the key facts so far.