For the first time in months, Wall Street is under serious pressure. The Dow Jones Industrial Average has dropped below its 50-day moving average, the CBOE Volatility Index has surged above its 200-day moving average, safe-haven assets like gold and Treasury bonds are well-bid, and bank stocks are taking a clobbering.
All this is being driven by rising fears about the future of the Trump administration amid a cavalcade of negative headlines. At the top are the alleged leaking of intelligence material to Russian officials, as well as supposed pressure on former FBI Director James Comey to drop an investigation into resigned national security adviser Michael Flynn on ties to Russia and Turkey.
President Donald Trump’s critics are claiming this could involve an impeachable offense. That remains to be seen. However, the situation is further poisoning the well on any hopes of bipartisan cooperation on pro-growth initiatives like healthcare reform and tax cuts — initiatives that drove the epic post-election rally in stocks.
Fears over a drag on the economy are also having a very specific effect: pushing back Federal Reserve interest rate hike odds. In turn, big bank stocks are getting hit hard.
Here are seven such stocks that are getting slammed, and a look at how much more downside these financial companies could have.
Bank Stocks Getting Slammed: Goldman Sachs (GS)
Goldman Sachs Group Inc (NYSE:GS) has already been mostly flat after recovering from a rare earnings miss and subsequent share drop in the middle of April. Of course, the last time GS suffered a major decline — last summer — the stock then enjoyed a nearly 90% rally on hopes of net interest margin gains (on Trump economic initiatives) and a deregulation push.
But things were bad, and now they’re getting worse.
Goldman Sachs is dropping out of a tight three-month downtrend, testing critical support near the $215-per-share level, closing in on its 200-day moving average for the first time since late September. Should that level collapse, there’s considerable (read: double-digit) downside potential from there.
Bank Stocks Getting Slammed: JPMorgan Chase (JPM)
JPMorgan Chase & Co. (NYSE:JPM) shares had been holding up well following its first-quarter earnings. When it last reported results on April 13, the bank reported better-than-expected earnings of $1.65 per share (12 cents ahead of estimates) on a 9% increase in average core loans. Revenues jumped 6.2% from the prior year period.
Now, however, JPM stock is dropping to test its year-to-date support range between $82.50 and $85. Similar to some of the other names on this list, JPMorgan is tracing out a massive, if somewhat lopsided, head-and-shoulders reversal pattern.
If violated with a break of its neckline support — again between $82.50 and $85 — it would result in a downside target of around $71, which would be a 17% drop from here as some of the Trump-related optimism is deflated.
Bank Stocks Getting Slammed: Citigroup (C)
Citigroup Inc (NYSE:C) shares enjoyed a similarly fine earnings report about a month ago. The bank recorded top- and bottom-line beats with profits of $1.35 per share beating estimates by 11 cents on a 3.2% year-over-year improvement in revenue.
Alas, C shares are now bonking their head on overhead resistance from its six-month consolidation range.
With the bulls unable to break through the $62-a-share level, watch for a decline back to critical support near $55, which would be worth an 8%-plus decline from here.
That also would represent a test of the 200-day moving average — a level that hasn’t been broken since last August.
Bank Stocks Getting Slammed: Bank of America (BAC)
Bank of America Corp (NYSE:BAC) reported a top- and bottom-line beat on April 18, with earnings of 41 cents per share six cents ahead of estimates on a 6.9% rise in revenues. That was good enough to launch BAC shares into a mini-rally of roughly 5% in about a week … but without any other catalysts, the stock started to tread water.
Then Wednesday happened, and the rug was pulled.
BofA has been slammed down to the critical support level of its six-month trading range. This traces out an epic head-and-shoulders reversal pattern that, on a breakdown, suggests a downside target of $18. That would be worth a 21% decline from current levels.
Bank Stocks Getting Slammed: Morgan Stanley (MS)
Morgan Stanley (NYSE:MS) shares are dropping to test the neckline of a six-month head-and-shoulders reversal pattern.
A breakdown here would set a downside target of $33, which would be worth a 18% decline from here. It also would take out the 200-day moving average for the first time since last July and mark the first significant reversal in a powerful uptrend that started last summer.
Shares more than doubled into the high set in March, driven by hopes of higher long-term bond yields (boosting margins) and a relaxation of Dodd-Frank regulations. The company also enjoyed revenue and profit beats April 19, with earnings of $1 per share coming in 10 cents ahead of estimates.
Bank Stocks Getting Slammed: Wells Fargo (WFC)
Wells Fargo & Co (NYSE:WFC), the last of the Big Four bank stocks mentioned here, was already suffering on its own merits. When the company last resulted results on April 13, results were mixed, with revenues down 0.9% on a drop in mortgage originations — something management warned was set to continue.
However, WFC stock has now drifted down to test critical support at its 200-day moving average.
Shares already were down some 12% from its March high, but a breakdown here would set up a return to its pre-election level near $45. That would represent an additional 14% loss from here.
Bank Stocks Getting Slammed: KeyCorp (KEY)
Showing that it’s not just the big commercial and industrial banks that are getting hit, but regional banks as well, KeyCorp (NYSE:KEY) shares are on the slide, too.
When it last reported quarterly numbers on April 20, investors cheered the top- and bottom-line beat with earnings of 32 cents per share four cents ahead of estimates on a 44% jump in revenues thanks to the rollup of the First Niagara acquisition.
But the good times are long gone, with shares falling away from six-month overhead resistance near the $19-a-share level, closing in on critical support near $17.
A breakdown would trace a decline to a target of $14.50, a decline of around 17% from here that would represent the first violation of the 200-day moving average since August.