Banks stocks took a beating in premarket trade Friday, as longer-term Treasury yields fell to multi-month lows to extend a global rally in government bonds. The SPDR Financial Select Sector ETF slumped 1.1% ahead of the open. Among its more heavily-weighted components seeing early activity, shares of Bank of America Corp. dropped 1.6%, of Citigroup Inc. shed 1.6%, of J.P. Morgan Chase & Co. lost 1.3%, of Goldman Sachs Group Inc. gave up 1.4% and of Wells Fargo & Co. declined 1.4%. The yield on the 10-year Treasury note fell to 1.658%, the lowest level since Feb. 24. Yields on Japanese 10-year government bonds fell to all-time lows overnight, while yields on German and U.K. government bonds closed at record lows on Thursday. Lower long-term interest rates can hurt bank earnings, as they reduce the spread between what banks earn by funding longer-term assets, such as loans, with shorter-term liabilities.
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