The KBW Nasdaq Bank Index, which tracks 24 of the largest U.S. lenders, has fallen for six straight weeks. That is its longest losing run since July 2008. It slipped another 1.1% on Monday, putting it on track for a seventh.
The index closed Monday at 167.15 points. That is 11.8% below where it stood when the streak began in early September, and 13.8% below its Aug. 14 record close of 193.91.
Bank stocks are now up just 1.8% this year, against an 11.8% gain for the State Street SPDR S&P 500 ETF (SPY).
Memories of 2008
In the spring and summer of 2008, U.S. bank stocks fell for 10 weeks in a row. Bear Stearns had already been rescued. Lehman Brothers would file for bankruptcy two months after the streak ended.
In the 18 years since, bank stocks have never lost more than five weeks in a row. That record has now been broken.
Last month, the Federal Reserve raised rates for the first time since 2023 to 3.75% to 4.00%.
Long-term yields followed. The 10-year Treasury yield stands at 5.12%, the 30-year at 5.45% and the 2-year at 4.77%.
Higher rates can help banks earn more on loans. When they rise quickly, however, they cut the value of the bonds banks already own and raise the risk that borrowers fall behind on payments.
Investors appear to be trading bank stocks against the direction of rates, treating a rapid climb as a clear negative, according to a Bank of America Global Research report led by analyst Ebrahim Poonawala.
Bank Of America Takes The Biggest Hit
Bank of America Corp. (BAC) reported a few days after the Treasury Department hit it with a $1.2 billion penalty. Regulators found the bank failed to properly report more than $5 billion in suspicious transactions.
Third-quarter net income fell to $6.9 billion from $8.3 billion a year earlier. Trading revenue dropped 5% and investment banking fees 11%.
The stock trades at $50.39, about 23% below its 2026 high.
Citigroup Inc. (C) sits 18% below its June peak. Morgan Stanley (MS) has lost 11.7% over the past month.
Bank of America does not read the selloff as a verdict on profits.
“Positioning, not fundamentals or EPS revisions, drove post-earnings stock reactions,” Poonawala said in the report.
The bank saw no material change to 2027 earnings estimates. Large U.S. banks trade at about 10 times expected 2027 earnings, according to the report.
Not One Bank In The Index Is Above Its 50-Day Average
None of the 24 stocks in the KBW index trades above its 50-day moving average, the average closing price of the past 50 sessions, Jonathan Roque of 22V Research said in a note on Monday. Only 29% are above their 200-day average.
Roque flagged six names that together make up half of the index’s market value: Bank of America, Capital One Financial Corp. (COF), Citigroup, Wells Fargo & Co. (WFC), Morgan Stanley and Goldman Sachs Group Inc. (GS).
All six trade below both averages.
Roque sees the index risking a drop to its March low, near 146 to 147 points.
“The market cannot go up when banks go down,” Roque said.
Regional lenders have held up better. The State Street SPDR S&P Regional Banking ETF (KRE) is up 6.7% this year.
The comparison with 2008 has limits. Back then, the streak reflected mounting losses on mortgage assets.
This time, Bank of America links the pressure to rising rates and investor positioning, not to the banks’ earnings.
