The S&P 500 dropped 2.28% on Wednesday, the largest single decline since June 2010, on ADP’s estimate that only 38,000 employees were added in the last month, versus the expectated 175,000. All the large banks saw declines well above the market average; WFC (a UASBIG holding) declined 5.04%, while BAC (a recently closed position) was down 4.26%, JPM and C fell 3.42% and 3.65% respectively.
Large banks seem to have three main factors working against them. One, a deteriorating macro environment reduces total business, and causes more mortgage related problems. Two, the low interest rate environment* compress net interest margins. Three, the federal government is becoming more aggressive in its push for a housing related settlement, which will be anywhere between 5 and 30 billion dollars total, to be split proportionally among the previously mentioned banks.
*10-year treasury closed below 3%