Why Shares of Major Banks Fell in March
Shares of large financial institutions underperformed during a miserable month for the markets, as investors braced for the impact of falling interest rates and a potential recession. Banks make their money based on the amount of interest they can charge when making loans, and in a slowing economy, earnings tend to get hit.
Citigroup (NYSE: C) shares fell 33.6% for the month, according to data provided by S&P Global Market Intelligence, while shares of Wells Fargo (NYSE: WFC), U.S. Bancorp (NYSE: USB), Bank of America (NYSE: BAC), and JP Morgan Chase (NYSE: JPM) were down 29.7%, 25.8%, 25.5%, and 22.5%, respectively.
There was a lot going on in March with the world, and markets, focused on the COVID-19 coronavirus pandemic and its impact on society. But for bank investors, the pivotal moment came on March 15, when the Federal Open Market Committee slashed the benchmark federal funds rate by 100 basis points to a target range of 0% to 0.25%. The cut followed a 50-basis point rate cut just a few weeks prior.
Source Fool.com
