Shares of large banks and other financial stocks were pummelled on Wall Street Monday as fears of a US economic slowdown heightened worries over deteriorating credit quality.
US banks were broadly lower, but the hardest-hit included Bank of America, Citigroup, Goldman Sachs
and Morgan Stanley, all down 6.0 percent or more in afternoon trade.
But the sector selloff extended to Europe as well, with German giant Deutsche Bank plunging 9.5 percent and France's Societe Generale dropping 6.1 percent, respectively.
A slowing economy translates into higher loan defaults, weaker credit quality and lower interest rates, all of which are bad for bank profits, said Jim Sinegal, an analyst of banks and payment companies at Morningstar.
A bad economy also depresses capital markets activity, which is especially important to the earnings
Goldman Sachs and Morgan Stanley, he said.
Insure-Digest
US banks were broadly lower, but the hardest-hit included Bank of America, Citigroup, Goldman Sachs
and Morgan Stanley, all down 6.0 percent or more in afternoon trade.
But the sector selloff extended to Europe as well, with German giant Deutsche Bank plunging 9.5 percent and France's Societe Generale dropping 6.1 percent, respectively.
A slowing economy translates into higher loan defaults, weaker credit quality and lower interest rates, all of which are bad for bank profits, said Jim Sinegal, an analyst of banks and payment companies at Morningstar.
A bad economy also depresses capital markets activity, which is especially important to the earnings
Goldman Sachs and Morgan Stanley, he said.
Insure-Digest
