By Gina Heeb

Bank stocks fell sharply premarket after President Trump unveiled sweeping tariffs that some feared would hurt loan growth and quality.

JPMorgan Chase and Bank of America dropped around 5%. U.S. Bancorp, PNC Financial Services, Truist Financial and Fifth Third were each down more than 3%. Higher prices from tariffs could weigh on loan growth at banks and cause borrowers to fall behind on payments.

"Banks are really proxies for the health of the U.S. economy," said Terry McEvoy, a bank analyst at Stephens. "Given the uncertainty around the economic outlook it's tough to be optimistic, at least in the near term."

Smaller banks also declined premarket.

The health of a small bank is very sensitive to the local economy, McEvoy said.

Federal Reserve officials recently met with state banking commissioners who expressed concerns about consequences community banks may face from tariffs, according to a person familiar with the matter.

At Fifth Third, CFO Bryan Preston said in a January interview that the bank had been stress testing individual sectors in portfolios to evaluate exposure to tariffs and other potential policy changes.

"With something as complicated as the U.S. economy and the global economy, there tends to be unexpected reactions to change," he said. "We just want to make sure we stay well-positioned for what could unexpectedly occur."

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(END) Dow Jones Newswires

April 03, 2025 09:17 ET (13:17 GMT)

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