Stock Market Crash Alert: S&P Bank Downgrades Rock Stocks

Source: FOTOGRIN /

A number of major American banks are in the red today following S&P Globals’ credit ratings adjustments on several regional lenders yesterday. Fears of a stock market crash are swirling as equity markets continue to show some sheepishness heading further into the second half of the year.

It seems the storm of credit downgrades Moody’s initiated last month continued this week. Indeed, on Monday, S&P Global cut its credit ratings on a number of regional lenders with high commercial real estate (CRE) exposure. This includes the likes of UMB Financial (NASDAQ:UMBF), Comerica Bank (NYSE:CMA), and KeyCorp (NYSE:KEY). For UMB and Comerica, the downgrades came as a result of deposit outflows and rising interest rates. For KeyCorp, the downgrade is likely a response to the bank’s dwindling profitability.

The downgrades appear to be part of the consequences of the regional banking crisis earlier this year, which saw three regional lenders go belly-up. However, Monday’s downgrades could be a partial continuation of Moody’s downgrade of U.S. credit earlier this summer following the debt ceiling crisis.

“Some of the structural aspects for banks, regarding their balance sheet, remain risks to banks, as the Fed continues to try to anchor inflation with higher rates for longer,” David Wagner, portfolio manager at Aptus Capital Advisors, told Reuters.

Stock Market Crash Fears Swirl as Bank Stocks Slip

While unmentioned by S&P, a number of large American banks have suffered as a result of yesterday’s downgrades.

Indeed, JPMorgan Chase (NYSE:JPM), Bank of America (NYSE:BAC), and Wells Fargo (NYSE:WFC) are each down about 2% today, while Citigroup (NYSE:C), Goldman (NYSE:GS) and Morgan Stanley (NYSE:MS) have slid around 1% and 1.5%.

As you might imagine, however, the regional banks in question felt the greatest sting from S&P’s downgrade. UMB is down about 3% today, as Comerica and KeyCorp stocks reel from roughly 4% losses today.

On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

With degrees in economics and journalism, Shrey Dua leverages his ample experience in media and reporting to contribute well-informed articles covering everything from financial regulation and the electric vehicle industry to the housing market and monetary policy. Shrey’s articles have featured in the likes of Morning Brew, Real Clear Markets, the Downline Podcast, and more.

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