Wells Fargo (WFC) shares experienced a significant pre-market plunge of 5.55% as investors brace for upcoming bank earnings and a potentially cautious outlook for the financial sector. The sharp decline comes ahead of Wells Fargo's scheduled earnings call on April 11, along with other major U.S. banks including JPMorgan Chase, Morgan Stanley, and The Bank of New York Mellon.

According to a recent analysis by BofA Securities, banks are expected to "strike a cautious tone" during their earnings calls, focusing on risks associated with policy uncertainties such as tariffs and the Department of Government Efficiency (DOGE). While major credit issues are not anticipated immediately, there are growing concerns that banks may begin increasing their reserves due to economic uncertainties. This cautious stance could be contributing to the sell-off in Wells Fargo's stock.

Adding to the downward pressure, BofA Securities has revised its price target for Wells Fargo from $85 to $83, reflecting a more conservative outlook. Investors will be closely watching the upcoming earnings call for signs of consumer and corporate strength, particularly in investment banking and lending activities. The market reaction suggests that traders are positioning themselves defensively, anticipating potential challenges in the banking sector for the remainder of 2025.