Financial Stocks Turns Sharply Lower After Weak Jobs Report

By Tomi KilgoreMarketsMarketWatch Pulse

Financial stocks turned sharply lower ahead of Friday's open, after Treasury yields sank in the wake of a much weaker-than-expected May jobs report. The SPDR Financial Select Sector ETF slumped 1.6% in premarket trade, after trading up 0.1% before the jobs report was released. Among the ETF's more heavily-weighted components, shares of J.P. Morgan Chase & Co. shed 1.8%, of Bank of America Corp. lost 2.8%, of Citigroup Inc. slid 2.8%, of Wells Fargo & Co. declined 1.7% and of Goldman Sachs Group Inc. gave up 1.9%. The yield on the 10-year Treasury note dropped 6.7 basis points to 1.744%, after the Labor Department said only 38,000 new jobs were created in May, below expectations of 155,000 jobs. Lower long-term yield can hurt bank earnings as they compress margins banks earn on loans.

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