Bank stocks, among the biggest winners since Donald Trump’s election, were among the biggest losers as the president’s political woes intensified. Citigroup (C) fell back below a buy point, while Bank of America (BAC), Morgan Stanley (MS) and several other big financials undercut key support levels. JPMorgan Chase (JPM) and Goldman Sachs (GS), both members of the Dow Jones industrial average, tumbled below the low of their current consolidations.
Stocks sold off Wednesday on news reports that Trump pressured then-FBI Director James Comey to drop his investigation of Mike Flynn, who was briefly the president’s national security advisor. Trump abruptly fired Comey last week.
While social media is rampant with chatter of impeachment, markets are worried about more realistic scenarios. Trump’s agenda for tax cuts and other pro-growth ideas already seem stalled. As a result, the odds of Federal Reserve rate hikes are falling. Treasury yields are sinking, with the yield curve flattening out once again. Bank executives and shareholders have been counting on stronger economic growth to boost lending — and widen the spread between its borrowing costs and lending rates.
The Trump administration could still go forward with regulatory relief for banks. But even that could be delayed or scaled back as the president and top officials are occupied putting out political fires of his own making.
Citigroup last week cleared an aggressive buy point at 60.89. On Tuesday, shares ran up to just below a convention buy point of 62.63. But Citigroup tumbled 4% to 59.98 on the stock market today, back below the alternative entry though finding some support at its 50-day moving average.
Bank of America, which had just gotten above its 50-day line, fell 5.9%. Morgan Stanley, off 5.6%, also broke through that support level and is on track for a 2017 closing low. Citizens Financial Group (CFG) (-6.8%), KeyCorp (KEY) (-4.8%) and Comerica (CMA) (-5.6%) were among several other financials piercing through their 50-day lines.
The Dow’s JPMorgan Chase and Goldman Sachs, already on the wrong side of the 50-day line, fell 3.8% and 5.3%, respectively. Both fell intraday below the low end of their base patterns.
Wells Fargo (WFC), which can’t shake the fake accounts scandal, lost 1.9%, closing just below its 200-day line.