Banking stocks plunged on Thursday, April 4, after President Donald Trump’s sweeping reciprocal tariff announcement sent shockwaves through Wall Street, dragging major indices lower and triggering renewed concerns over economic slowdown and global trade instability.
The SPDR S&P Bank ETF (KBE) dropped nearly 8%, while the SPDR S&P Regional Banking ETF (KRE) fell over 9%—marking their worst single-day performance since the regional banking turmoil of March 2023. Western Alliance Bancorp led the losses with a sharp 14% plunge. Citigroup and Bank of America also tumbled by 11% and 10%, respectively.
The sell-off extended to other major banking players: Morgan Stanley, Goldman Sachs, and Wells Fargo each slid 9%, while JPMorgan Chase fell 7%. The sector-wide rout reflects a growing fear of reduced capital market activity, tightening consumer confidence, and delayed merger and acquisition deals, analysts said.
“The uncertainty around the indirect impact of broad-based tariff increases on the economy and activity levels is likely to dominate bank stocks in the near term,” said Jim Mitchell of Seaport Research Partners.
J.P. Morgan analysts added that they are more cautious on regional banks, citing their limited buffers against shocks, unlike GSIBs (Global Systemically Important Banks), which may benefit from increased trading revenue amid heightened market volatility.
With Trump’s 10% baseline tariff now a reality, the banking sector’s once-bullish 2025 outlook is under serious threat.
