By Andrew Welsch

Investors are once again dumping shares of banks and brokerage firms with the KBW Nasdaq Bank Index falling 1.2% as of midafternoon Thursday amid mounting concerns about a potential economic slowdown.

The selloff comes amid a general decline in equities; the S&P 500 fell 1.4% on Thursday and is on pace to close in correction territory.

Among the stocks hardest hit was Robinhood Markets, which fell 7.3% on strong trading volume (34 million compared with a daily average of 30 million). Shares of the fast-growing brokerage firm soared over the past year and are still up 103% over the past 12 months. But the stock has had a rough start to 2025. It is down 34% over the past month.

Shares of large consumer banks were also trending down on Thursday. JPMorgan Chase's stock fell 1.2%. Wealth management and investment banks were also taking their lumps. For example, Morgan Stanley and Stifel Financial were down 2.1% and 2.7%, respectively. Charles Schwab fell 0.9%.

Some recent economic data and consumer surveys have pointed to less robust growth than previously expected. For instance, credit and debit card spending per household declined 2.3% year over year in February, compared with a 1.9% year over year rise in January, according to Bank of America aggregated card data. An economic slowdown or recession would affect banks and brokerage firms because loan demand could fall, delinquencies rise, capital market activity wane, and clients deposit fewer dollars in their brokerage accounts.

In addition to weaker economic growth, investors are also weighing the impact of tariffs. So far, President Donald Trump's tariffs affect more than $1 trillion of imports, with more to come. That is more than double the amount during President Trump's first term, according to a March 12 analysis by the Tax Foundation.

Write to Andrew Welsch at andrew.welsch@barrons.com

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March 13, 2025 15:52 ET (19:52 GMT)

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