Financial Stocks Take a Broad Beating As Treasury Yields Slide To Multiyear Lows

By Tomi KilgoreMarketsMarketWatch Pulse

The financial sector suffered broad, sharp losses Tuesday, as the drop in longer-term Treasury yields put pressure on bank stocks. The SPDR Financial Select Sector ETF dropped 1.5% to a two-month low, while the SPDR S&P Bank ETF shed 2.2%. Among the sector's more-active stocks, Bank of America Corp. slid 2.6%, and has now tumbled 8.2% amid a four-session losing streak. Shares of Citgroup Inc. lost 3.2%, of Wells Fargo & Co. fell 2.6%, of Regions Financial Corp. gave up 2.8% and of J.P. Morgan Chase & Co. declined 1.9%. The yield on the 10-year Treasury yield was set to close at the lowest level since December 2012, to extend a global drop in rates that included the benchmark German rate turning negative for the first time in history. Lower long-term interest rates narrows the spread between what banks earn by funding longer-term loans with shorter-term liabilities. The biggest decliner was Synchrony Financial's stock , which plunged 14% to a four-month low after the consumer financial services company warned of higher charge-off rates. Elsewhere, American Express Co. shares dropped 4.1%, and was the biggest percentage decline among components of the Dow Jones Industrial Average .

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