Bank Stocks Lose Momentum as Turkey Crisis Worsens

After a dismal first half of 2018, bank stocks perked up last month on tailwinds from strong second-quarter results and rising interest rates. The Financial Select Sector SPDR ETF (XLF), which has ~50% exposure to the banking industry, has been falling since last Friday as Turkey’s financial crisis deepened, pushing the domestic currency to a record low against the US dollar. JPMorgan Chase (JPM), Bank of America (BAC), Wells Fargo (WFC), Citigroup (C), and Goldman Sachs (GS), the top five US banks on the basis of total assets held, have fallen 2.6%, 3.5%, 1.4%, 3.9%, and 3%, respectively, in the last two trading days.