Bank of America (BAC) shares plummeted 6.92% in pre-market trading on Friday, as the escalating trade war between the United States and China sent shockwaves through the financial sector. The sharp decline comes amid broader concerns about a potential recession triggered by President Trump's sweeping tariff plans and China's retaliatory measures.
The selloff in Bank of America's stock is part of a larger trend affecting major US banks. China's announcement of 34% import tariffs on all US goods, in response to Trump's tariff plans, has intensified fears of a global economic slowdown. Financial institutions are particularly vulnerable to economic downturns, as they can lead to reduced loan demand, increased delinquencies, and a slowdown in merger and acquisition activities.
Adding to the pressure on bank stocks, traders are now pricing in more than 100 basis points of Federal Reserve rate cuts this year, up from around 75 basis points earlier this week. Lower interest rates typically dent lenders' margins, further impacting their profitability. The KBW Nasdaq Bank Index tumbled 9.9% in the previous session, reflecting the widespread anxiety in the banking sector. As Bank of America and its peers prepare to report their quarterly results next week, investors will be closely watching for any signs of how the escalating trade tensions might impact the bank's future performance and guidance.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.