Big bank shares buckle as recession fears spark a sector sell-off

Big banks tumbled alongside the broader market late Monday afternoon. Shares of Morgan Stanley led the decline, sinking 6.4%, while Wells Fargo, Citigroup, JPMorgan Chase, Goldman Sachs, and Bank of America also dropped.

The sell-off follows President Trump’s latest comments to Fox News, describing the US economy as being in a “period of transition” and sparking fresh uncertainty over tariff policies and recession fears. The XLF SPDR Financial ETF, which tracks the sector, has wiped out all of its gains for the year and is now down slightly.

Financials had a solid 2024, but they’ve been hit hard of late. Last week, the sector endured one of its worst sessions since the SVB banking crisis in March 2023. Meanwhile, February’s jobs report came in below expectations, with only 151,000 nonfarm payrolls added — 9,000 less than expected. Banks are cyclical, so any sign of economic weakness can raise red flags for investors, since it can lead to higher loan losses and a slowdown in lending if consumer spending and business growth stalls.

In January, JPMorgan CEO Jamie Dimon noted that rising unemployment remains a key vulnerability, warning that higher joblessness, combined with inflation, could drive significant credit losses across both the consumer and corporate sides. Last week, Goldman Sachs slashed its 2025 growth forecast, cutting it from 2.4% to 1.7%, citing tariff concerns and a stubbornly tight labor market.