Bank stocks and sector-related bank ETFs plunged on Friday, despite strong third quarter profit results.
Among the worst performing ETFs on Friday, the iShares U.S. Regional Banks ETF (NYSEArca: IAT) declined 3.6%, SPDR S&P Regional Banking ETF (NYSEArca: KRE) retreated 3.6%, PowerShares KBW Regional Bank Portfolio (NYSEArca: KBWR) decreased 3.5%. Meanwhile, the broader Financial Select Sector SPDR (NYSEArca: XLF) fell 0.9%.
J.P. Morgan Chase (NYSE: JPM), Citigroup (NYSE: C), Wells Fargo (NYSE: WFC) and PNC Financial Services (NYSE: PNC) all revealed strong quarterly results on Friday, but the markets did not appear impressed.
“There were some concerns that interest margins would start to deteriorate,” Octavio Marenzi, who runs management consultancy Opimas, told CNBC. “There was some weakness in home lending, but cards and consumer banking more than made up for this, as well as a decline in fixed-income markets, but this was at least partially offset by gains in equities.”
JPMorgan Chase & Co. Chief Financial Officer Marianne Lake tried to explain the divergence between bank earnings and stock price moves during the company’s earnings call, arguing that the “macro uncertainty noise” and overhang weighed the markets, reports Ciara Linnane for MarketWatch.