Last week, Moody’s warned it may downgrade the credit ratings of Bank of America (NYSE: BAC), Citigroup (NYSE: C) and Wells Fargo (NYSE: WFC).
“With the recent spate of economic data pointing to prolonged weakness in an already tepid recovery, positive catalysts for the banks sector appear distant,” Sterne Agee analysts said in a note Monday.
“The headwinds continue to mount for the group as housing values remain under pressure, demand for credit remains weak, and the growth outlook for the sector is subdued at this point,” they wrote. “Overall the group remains inexpensive relative to historical valuations — however, valuation alone is insufficient to provide material downside support at current levels.”
Financial Select Sector SPDR Fund
