Why Did Financials Fall Last Week?
Bank stocks fell
US stock indexes finished marginally lower last week. Banks and insurance companies’ huge losses were neutralized by gains for healthcare and technology companies. The S&P 500 Index (SPX-INDEX) fell 0.6% to 2,461.43, while the NASDAQ Composite Index fell 1.2% to 6,360.19 and the Dow Jones Industrial Average fell 0.9%.
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Insurance stocks got hammered
Bank stocks fell lower last week as bond yields reached the lowest levels in 2017, which caused interest rates to fall. The S&P Financial Sector Index (XLF) fell 2.8%, while Bank of America (BAC), Morgan Stanley (MS), Goldman Sachs (GS), and JPMorgan (JPM) fell 5%, 4.7%, 3.8%, and 3.6%, respectively. Insurance companies fell as investors braced for potential damage from Hurricane Irma. The S&P Insurance Select Industry Index (SPSIINS) fell 2.8% last week. Reinsurance companies also fell hard since most of their policies are for catastrophic losses—like losses caused by a hurricane. However, payment processing companies rose after MasterCard (MA) increased its fiscal revenue outlook. MasterCard rose 3% last week.