Financial exchange traded funds led the way lower in stocks Tuesday as a surprise Greek referendum threatened the Eurozone bailout plan and fallout from MF Global’s bankruptcy filing weighed on banks.
SPDR S&P Bank ETF (NYSEArca: KBE) and Financial Select Sector SPDR (NYSEArca: XLF) lost nearly 5% as the Dow shed almost 300 points.
Greece Prime Minister George Papandreou unexpectedly called for a vote on an additional referendum to the newest bailout plan.
“The referendum is a bad idea with a bad timing. The post-summit rally is over,” Lionel Jardin, head of institutional sales at Assya Capital, said in a Reuters report.
“Announcing something like this only days after the summit without consulting other Eurozone members is irresponsible,” Slovak Finance Minister Ivan Miklos said in the same report.
Shares of U.S. banks with exposure to European debt are falling. MF Global Holdings filed for bankruptcy protection Monday – the company had a highly-leveraged $6.3 billion exposure to European debt, according to MarketWatch. [Financial ETFs Down After MF Global Files for Bankruptcy]
Following rival banks JP Morgan Chase & Co. (NYSE: JPM) and Wells Fargo & Co. (NYSE: WFC), Bank of America (NYSE: BAC) will also be canceling its proposed $5 a month fee on debit cards after a severe backlash from consumers, reports Hugh Son for Bloomberg.
“For a lot of consumers, this was the last straw,” Jean Ann Fox, director of financial services for the Consumer Federation of America, said in the Bloomberg report. “Banks have been making a lot of changes to accounts, adding fees and raising the minimum balance needed, and consumers were clear that they objected to one more fee.”
Banking stocks were all mostly down Tuesday, led lower by Morgan Stanley (NYSE: MS), which shed 8%, and Citigroup (NYSE: C), which was down 7.6%. Bank of America shares lost 5.6% on Tuesday.
According to a prospectus sheet, Invesco PowerShares launched four new ETFs based on indexes from KBW. The provider will waive fees until Feb. 1, 2012 on the four funds. The ETFs include:
- PowerShares KBW Bank Portfolio (NYSEArca: KBWB)
- PowerShares KBW Capital markets Portfolio (NYSEArca: KBWC)
- PowerShares KBW Insurance Portfolio (NYSEArca: KBWI)
- PowerShares KBW Regional Banking Portfolio (NYSEArca: KBWR)
SPDR KBW Bank ETF
For more information on the financial sector, visit our financial category.
Max Chen contributed to this article.