Shares of U.S. banks dropped on Friday, with Wells Fargo's stock falling more than 6% and Goldman Sachs Group Inc down 7%, after the Federal Reserve capped dividend payments and barred share buybacks until at least the fourth quarter after its annual stress test.
) down 7%, after the Federal Reserve capped dividend payments and barred share buybacks until at least the fourth quarter after its annual stress test.
FILE PHOTO: Traders wearing masks work, on the first day of in person trading since the closure during the outbreak of the coronavirus disease on the floor at the New York Stock Exchange in New York, U.S., May 26, 2020. REUTERS/Brendan McDermid The S&P 500 banks index .SPXBK was down more than 5% and the S&P 500 financials index .SPSY dropped nearly 4%, making it the biggest drag on the S&P 500The drop in bank shares is in part tied to worries about how well the economy is likely to recover from the impact of the coronavirus pandemic, said Quincy Krosby, chief market strategist at Prudential Financial in Newark, New Jersey.
“Overall it does suggest that the Fed is concerned about the strength of the recovery, and the effect it will have on banks. I think it was expected by the market but not to this extent,” Krosby said.The S&P 500 was down about 2% at midday Friday, with worries about a surge of new coronavirus cases in the United States also hitting the market. Shares of JPMorgan Chase & Co (
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