Bank Stocks Look Ripe for a Plunge
Bank stocks enjoyed a major run following President Trump's election. Then they stalled in March and have been lagging the market since then. Now, they look ripe for a big fall, as they have dropped well below key support levels. Banks seem to be suffering from a number of issues, all related to rates. Treasuries have rallied, the Fed has stalled its hikes, and inflation is low, all a recipe for lower net interest margins at banks. A major part of the excitement that drove the rally in bank shares was hopes for a higher-rate, higher-inflation environment, but that vision for the future is receding quickly.
FINSUM : Given how much the rate outlook has changed from earlier this year, it would not be a surprise to see bank stocks come back down considerably. Their rise was always a bit overzealous, so a decline shouldn't be unexpected.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.