Bank Stocks Are On Their Longest Losing Streak Since 2008: Rates Aren't The Only Problem
Key takeaways
- Bank stocks are on a prolonged sell‑off driven by rate hikes and investor positioning, with the KBW Nasdaq Bank Index down over 13% from its recent peak.
- KBW index down 1.1% on Monday to 167.15 points
- Index 11.8% below September start
- Index 13.8% below Aug. 14 record of 193.91
What happened
The KBW Nasdaq Bank Index, which tracks 24 of the largest U.S. lenders, has fallen for six straight weeks – its longest losing streak since July 2008 – and slipped another 1.1% on Monday, putting it on track for a seventh. The index closed Monday at 167.15 points, 11.8% below where it stood when the streak began in early September and 13.8% below its August 14 record close of 193.91. Bank stocks are now up just 1.8% this year, versus an 11.8% gain for the S&P 500 ETF. The decline follows a Fed…
Why it matters
The prolonged sell‑off signals that market sentiment toward banks has shifted from a focus on earnings to a focus on positioning and risk. With the index down more than 13% from its recent peak, investors are re‑evaluating the value of bank shares, especially as the Fed’s rate hikes continue to compress net interest…
Short-term and longer-term
Short-term. Over the next few days, watch for further Fed commentary and the release of Bank of America’s Q3 earnings.
Longer-term. Over the coming months, the bank sector’s valuation will hinge on the trajectory of interest rates and the pace of credit tightening.