Banking & Finance

Financial Sector Routed on Oil, Coronavirus Worries

While energy sector stocks are taking the heaviest beating Monday, no sector is escaping unscathed. Turmoil in the energy sector is rippling through the financial sector as well.

Investors shaved 9% of financial stocks Monday morning. The promised crude oil production increases from Russia and Saudi Arabia cast a pall over U.S. crude oil producers, and that cloud was throwing a shadow over the financial sector that was so eager five years ago to lend money to drillers on the expectation of big returns. The Philadelphia Oil Services Index was down more than 26% and the KBW Bank Index was down more than 10%, making the financial sector the second-biggest loser on the day as of mid-morning.

Crude prices in the sub-$40 a barrel range threaten to derail those expectations. The plunging crude prices suggest weak lending ahead for financial institutions. Coupled with that are higher loan losses and the expected deflation of crude prices.

On top of the carnage in the oil sector, U.S. Treasury yields are below 1% for every duration bond. The two-year note yields a measly 0.34% and the 30-year just 0.97%.

With loan defaults threatening and bond underwriting unlikely to offset the losses, financial stocks were hit hard Monday morning. Bond markets reacting to both the plunge in crude prices and the spread of the coronavirus outbreak into some 60 countries.

24/7 Wall St. has been tracking the largest U.S. banks, along with several other financial services firms. Here are 10 that have posted the biggest losses before noon Monday. Credit card issuers are not among the top 10 losers Monday, probably because consumers aren’t expected to stop spending quite yet.

BOK Financial Corp. (NASDAQ: BOKF) closed at $65.13 on Friday, down from a year-to-date high of $87.97, and it was down 21% at $51.41 Monday morning.

Prosperity Bancshares Inc. (NYSE: PB) closed at $62.88 on Friday, down from a year-to-date high of $75.22, and it was down 14% at $54.11 Monday morning.

Comerica Inc. (NYSE: CMA) closed at $44.81 on Friday, down from a year-to-date high of $72.23, and it was down nearly 14% at $38.76 Monday morning.

Bank of American Corp. (NYSE: BAC) closed at $25.71 on Friday, down from a year-to-date high of $35.66, and it was down 12% at $22.63 Monday morning.

JPMorgan Chase & Co. (NYSE: JPM) closed at $108.08 on Friday, down from a year-to-date high of $141.10, and it was down more than 11% at $95.97 Monday morning.

Sterling Bancorp (NYSE: STL) closed at $15.98 on Friday, down from a year-to-date high of $21.21, and it was down nearly 11% at $14.26 Monday morning.

Citigroup Inc. (NYSE: C) closed at $61.28 on Friday, down from a year-to-date high of $83.11, and it was down nearly 11% at $54.71 Monday morning.

U.S. Bancorp (NYSE: USB) closed at $42.45 on Friday, down from a year-to-date high of $59.48, and it was nearly 11% at $37.94 Monday morning.

The PNC Financial Services Group Inc. (NYSE: PNC) closed at $114.23 on Friday, down from a year-to-date high of $161.25, and it was down nearly 10% at $103.09 Monday morning.

Goldman Sachs Group Inc. (NYSE: GS) closed at $192.85 on Friday, down from a year-to-date high of $250.46, and it was down 8% at $177.38 Monday morning.