From Bloomberg, March 6:
Shares of financial firms are once again sliding, as fresh worries over private credit combine with a broad market selloff to hit the weakened sector.
With the S&P 500 Index plumbing its lowest levels since late last year, investors showed little patience for bad news. Among the biggest losers was Western Alliance Bancorp, whose shares tumbled as much as 14% 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 were down around 5%, after the asset manager curbed withdrawals from one of its biggest private credit funds. Blue Owl Capital Inc. fell as much as 7% before trimming losses: The company has a $48 million exposure to a London-based property lender that filed for administration last month. The KBW Bank Index recently stood at the lowest intraday level since Nov. 25.
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 was headed for its worst week since November, while Brent crude topped $90 per barrel.
Credit Worries
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 35% year-to-date and on Friday touched their lowest intraday level since early April.
“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.”...
....MORE, charts, graphs
Earlier today: "BlackRock limits withdrawals as redemptions rattle private credit fund" (BLK)
As noted introducing March 1's "Beware of banks breaking bad, warns top B. of A. strategist. He casts a wary eye on bank-loan ETFs.":
Banks can be a tell on everything from the overall economy to credit markets to equities.
"Financials Fully Confirm the Downturn" (BAC; C; GS; JPM; USB; WFC: XLF)
Keeping track of what the financials are doing can pay dividends, so to speak.*
Here's the ETF for the financial stocks in the S&P 500:
And February 26:
"UBS now sees private credit defaults reaching 15% in worst case"
