JPMorgan, Wells Fargo, and Goldman Sachs shares fell as investors unwound positions following a widely anticipated Fed rate hike, signaling that the sector's recent gains may have reached a cyclical peak.
JPM fell 1% after Fed hike as the move was already priced in, with Dimon warning conditions may be 'as good as it gets'.
WFC dropped 3% due to heavier consumer and commercial real estate exposure, making the rate hike impact more negative.
GS lost 4% as a crowded-long unwind in trading and advisory business.
Regional banking ETF up 12.6% over past year but sector repriced the rally, leading to declines.
Major U.S. banks including JPMorgan, Wells Fargo, and Goldman Sachs saw share prices decline following the Federal Reserve's 4% rate hike. Despite textbook expectations that higher rates boost net interest margins, the market had already priced in the move, leaving no marginal buyers to support the sector.
The rate hike was highly anticipated and already priced into bank valuations. With many stocks in the sector having rallied significantly over the past year, there were few new buyers to support the price, and concerns regarding rising deposit costs and credit charge-offs outweighed the benefits of wider interest margins.