Share prices of the biggest U.S. banks reportedly are flirting with bear-market territory amid fears of weak trading revenues and fading hopes for President Donald Trump’s ambitious economic agenda.
“Goldman Sachs and Bank of America were among the biggest beneficiaries of the stock rally in the weeks after Donald Trump’s election victory in November, as investors looked forward to a profit-boosting mix of higher interest rates, lower taxes and lighter regulation,” the Financial Times reported.
“But some of those underpinnings have fallen away since then, as Trump’s early setback over healthcare policy cast doubt over his ability to implement other promised reforms,” the FT explained.
Shares in Goldman Sachs dropped 3.3 percent Wednesday, bringing the total fall from its closing high on March 3 to 16.5 percent — within reach of the 20 percent drop that commonly defines a “bear market.” Goldman shares rebounded Thursday, rising more than 1 percent to $214.
Share prices of Wells Fargo, Bank of America, JPMorgan and Morgan Stanley have all tumbled more than 10 percent from their post-election peaks, the FT reported.
Bank analysts have been switching “blue-sky earnings scenarios” of late last year with “more cloudy” outlooks, Fred Cannon, global director of research at Keefe, Bruyette & Woods in New York, told the FT.
He explained that the hopes of corporate tax reform happening any time this year have almost evaporated.
“Tax reform was difficult enough in 1986, when you had bipartisan support and an extremely popular president,” he said. “Without either, it always looked like a bit of a long shot.”
To be sure, in an even more disturbing sign, CNBC reported that the financial sector "just gave up all of this year's gains, and some strategists say that's sending the broader market a message about the health of the economy."
The sector, composed of a range of financial services firms such as insurance companies and banks, was leading the market for part of the year to date and was up 9 percent as of the beginning of March, CNBC explained.
The drop is a function of rates falling, along with ongoing concerns about global growth, said Oppenheimer head of technical analysis Ari Wald.
Financials underperforming in a falling-interest-rate environment flashes a "lacking vote of confidence about economic growth," he wrote Wednesday in an email to CNBC.
However, many respected economic voices have also urged caution about the liberal mainstream media's biased smear-campaign attacks on Trump, which have hindered full implentation of the president's plans to truly "Make America Great Again."
David Horowitz, author of the best-selling book "Big Agenda: President Trump's Plan to Save America," has told Newsmax TV that the market rally since Republican Donald Trump won the election has more room for gains as the president pushes his pro-business agenda.
“There's more upside. Starting from when he was president-elect he started this stock market boom,” he recently told “The Income Generation Show.”
“I don't think Trump's agenda is going to be stopped in its tracks. What people forget, I mean, it's all this inside-the-beltway chatter, all of it hysterical. The anti-Trump forces are truly deranged. You can't forget how he resonates with the people,” Horowitz said on "The Income Generation," which airs on Newsmax TV every Sunday at 10 am ET.
Meanwhile, veteran financial guru and former Ronald Reagan adviser Larry Kudlow is urging any impatient investors to just give Trump a chance to fully enact his strategies to reform healthcare, spark economic growth and redesign the tax system.
After all, Trump has been in office a relatively short time and has inherited a mountain of problems from the past two decades. “He's trying to fix a lot of problems that have gone unfixed in the last 20 years,” Kudlow explained to CNBC.
Trump “still wants tax reform and healthcare reform. Those are big issues for him.” the Newsmax Finance Insider said. “Give him a chance,” said Kudlow, who advised the Trump campaign on economic issues.
(Newsmax wires services contributed to this report).
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