Financials Sector Led the Market Slump on March 21
After showing weakness for two consecutive days, the financials sector fell on March 21. On Tuesday, the S&P 500 Financials sector index fell 2.9% to the lowest levels since February 8.
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Commercial bank sector fell
In the financials sector, the commercial bank industry was hit the hardest on March 21. Ongoing doubts about successful execution of massive tax cuts and increased infrastructural spending by President Trump dented the sentiment in the financials sector. The flattening yield curve also made concerns worse. Long-term yields fell more than short-term yields, which caused the spread to fall. Uncertainty in the market resulted in the profit-booking in the financials sector.
KeyCorp (KEY), Huntington Bancshares (HBAN), Comerica (CMA), and Bank of America (BAC) were the worst performers in the financials sector on Tuesday. Bank of America and JPMorgan Chase were the biggest drag in the banking sector. They caused a fall of 3.9% in the S&P commercial bank subsector—the biggest one-day drag since June 2016. Bank of America was the biggest gainer in the bank sector. It rose ~40% since President Trump won the presidential election.
Huntington Bancshares pays lawsuit
Huntington Bancshares, which provides banking solutions, fell 6.1% on Tuesday. Some investors think that President Trump’s trade policies will benefit certain states such as Ohio. After FirstMerit, Huntington Bancshares has become the biggest bank in Ohio. The sell-off in the financial sector, due to doubts about the execution of President Trump’s pro-growth policies, weighed on Huntington Bancshares.
According to reports released yesterday, Huntington Bancshares is paying the $16 million lawsuit against FirstMerit. FirstMerit was accused of overcharging customers with overdraft fees. Huntington Bancshares inherited the lawsuit when it acquired FirstMerit. On March 21, Huntington Bancshares closed the day at $12.70—the lowest close since November 2016.