Shares of financial firms slid on Friday, as fresh worries over private credit combined with a broad market selloff to hit the weakened sector.
Investors showed little patience for bad news, as the S&P 500 Index tumbled to close at its lowest levels since mid-December. Among the biggest losers was Western Alliance Bancorp, whose shares fell 8.5% after the bank said it will take a roughly $126 million charge because of a loan tied to bankrupt auto-parts company First Brands Group. The bank also filed a lawsuit against Jefferies Financial Group Inc.
“Western Alliance’s charge-off places renewed scrutiny on banks’ credit quality, particularly lending to non-bank financial institutions,” said Bloomberg Intelligence analyst Herman Chan.
Meanwhile, Blackrock Inc. shares closed down 7.2%, after the asset manager curbed withdrawals from one of its biggest private credit funds. Blue Owl Capital Inc. fell 5.1%: The company has a $48 million exposure to a London-based property lender that filed for administration last month. The KBW Bank Index closed at the lowest level since late November.
The selloff in financial stocks came as investors digested everything from an unexpectedly soft US employment report to another spike in oil prices resulting from the war with Iran. The S&P 500 Index posted its worst week since October, while Brent crude topped $90 per barrel.
Worries over disruptions from artificial intelligence and angst over exposure to the troubled private credit industry have weighed on the shares of lenders, payments providers and asset managers this year.
For Jefferies, the Western Alliance suit comes on the heels of mounting credit concerns in the wake of its exposure to failed UK lender MFS. The bank’s shares are down over 38% year-to-date and on Friday closed at the lowest level since December 2023.
“Investors should be asking Jefferies a lot more questions about their exposure,” said Matt Maley, chief market strategist at Miller Tabak + Co LLC. The credit concerns are “a problem for all financial stocks.”
Shares of regional banks are also struggling. Maley noted that the State Street SPDR S&P Regional Banking ETF just flashed an unfavorable chart signal as its weekly moving average convergence/divergence (MACD) indicator — used to gauge the direction of markets — made a bearish cross.
“Meaningful negative MACD crosses have been quite bearish for this group over the years,” he said.
Written by: Georgie McKay @Bloomberg
The post “Banks, Asset Manager Stocks Fall as Credit Concerns Persist” first appeared on Bloomberg
