Stocks are under incredible pressure Friday, with the Dow Jones Industrial Average losing more than 500 points at its low, while the S&P 500 dropped below its August 2015 “flash crash” lows to return to 2014 levels.
Things are even worse for small-cap stocks, with the Russell 2000 falling below $1,000 to return to July 2013 levels.
The catalysts are familiar to my readers: The ongoing waterfall collapse in crude oil, volatility in China, weak economic data at home and overseas, tepid earnings, the threat of additional Federal Reserve rate hikes and bond market vulnerabilities.
While energy stocks have already been bombed out, the Big Bank stocks are the next most vulnerable sector group to all these dynamics.
Here are four big Wall Street banks that are feeling the heat.
Wall Street Banks Going Up in Flames: Bank of America Corp (BAC)
Bank of America Corp (BAC) shares have dropped back to early 2014 levels in what looks like the start of a potential breakdown from a trading range going all the way back to 2013.
Edge Pro subscribers already bagged a 515% gain in the Jan $17 BAC. However, further downside extension looks likely as major technical support gets taken out.
We will know more when the company reports results on Jan. 19 before the bell. Analysts are looking for earnings of 26 cents per share on revenues of $19.86 billion.
Wall Street Banks Going Up in Flames: Citigroup Inc (C)
Citigroup Inc (C) shares are in ragged shape. C stock is wafting back to early 2013 levels, down more than 20% from its summertime highs. As of this writing, Citigroup’s stock price is down nearly 8% after the bank stock reported in-line earnings and a revenue beat for the fourth quarter.
Investors were discouraged by a decline in credit quality, with loan loss reserves building $588 million vs. a $441 million release over the same period last year.
On the post-earnings conference call, management warned of a difficult environment in 2016 due to uneven global growth, low commodity prices and the anticipated slow pace of U.S. rate hikes weighing on net interest margins.
Wall Street Banks Going Up in Flames: Goldman Sachs Group Inc (GS)
Goldman Sachs Group Inc (GS) shares have dropped back to early 2014 levels as doubts over trading revenue — given recent market turmoil — continue to grow.
Litigation remains an overhang as well, with the company confirming a settlement over residential mortgage-backed securities that will reduce Q4 earnings by $1.5 billion.
We will know more when the company releases results on Jan. 20 before the bell. Analysts are looking for earnings of $3.53 per share on revenues of $7.14 billion.
Wall Street Banks Going Up in Flames: Morgan Stanley (MS)
Morgan Stanley (MS) shares have been slammed back to late 2013 levels, down more than 37% from their summertime high.
Evidence of the company’s troubles were reflected in a decision earlier this month to cut some 1,200 workers from its fixed-income trading business, something that will hit Q4 earnings with a $150 million charge.
The company will report results on Jan. 19 before the bell. Analysts are looking for earnings of 33 cents per share on revenues of $7.6 billion.
Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters. A two-week and four-week free trial offer has been extended to InvestorPlace readers.
