Bank stocks sink as yield curve inverts, with Bank of America, Citigroup and Regions leading the losers
Banks stock took a broad hit in premarket trading Wednesday, as an inversion in the closely watched 2-year-10-year Treasury yield spread stoked fears of an impending credit crunch. The SPDR Financial Select Sector ETF dropped 1.9% ahead of the open, as all of the components seeing premarket activity lost ground. Among the biggest declines, shares of Regions Financial Corp. fell 3.2%, Citigroup Inc. slid 3.0% and Bank of America Corp. shed 3.0%. Elsewhere, the stocks of J.P. Morgan Chase & Co. and Goldman Sachs Group Inc. both dropped 2.6%, and were the leading early losers among Dow Jones Industrial Average components. Meanwhile, Dow industrials futures tumbled 344 points, or 1.3%. An inverted yield curve can hurt bank profits, as it can make the usual practice of borrowing shorter term to lend longer term is no longer profitable.
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