Financial stocks slide further as recession fears take hold

Financial sector stocks retreated as recession fears rocked the broader equity market in Monday afternoon trading. Some pockets of the industry, such as P&C insurance, gained as they're seen as recession resistant. Tech-focused financial names appeared to be some of the day's biggest losers.

On Sunday, President Donald Trump declined to rule out a recession as his U.S. tariffs, and ensuing retaliatory tariffs, play out. He insists that the levies against incoming imports will be "great for us" in the end.

That has rattled investors. "Higher inflation and lower growth have spurred investor worries of resurging stagflation," said Evercore ISI's Julian Emanuel in a note to clients.

The Financial Select Sector SPDR ETF (XLF) dropped 2.3%, cmpared with the S&P 500's 2.5% decline. The SPDR S&P Bank ETF (KBE) slid 3.2%, while the iShares U.S. Insurance ETF (IAK) edged down 0.1%. While exchange stocks stayed generally positive, broker-dealers slumped. Thus, the iShares U.S Broker-Dealers & Securities Exchanges ETF (IAI) dipped 4.4%.

Universal bank stocks all sank at least 3% as the prospects for renewed deal activity dimmed. Morgan Stanley (MS) tumbled 6.2%, Wells Fargo (WFC) wilted 6.0%, Goldman Sachs (GS) sank 5.3%, Citigroup (C) slid 4.6%, JPMorgan Chase (JPM) dipped 4.2%, and Bank of America (BAC) fell 3.5%.

Regional banks also felt the pain. U.S. Bancorp (USB) declined 4.0%, Flagstar Financial (FLG) dropped 4.5%, KeyCorp (KEY) -3.8%, Truist Financial (TFC) -3.5%, PNC Financial Services (PNC) fell 2.7%, Huntington BancShares (HBAN) -3.5%, and Regions Financial (RF) -1.7%.

Private equity was punished as the deal-making outlook deteriorated. Ares Management (ARES) sank 8.4%, Carlyle Group (CG) -6.5%, KKR (KKR) -6.5%, Apollo Global Management (APO) -5.5%, and Blackstone (BX) -4.5%.

Consumer finance stocks, such as Ally Financial (ALLY) -3.2%, SoFi Technologies (SOFI) -8.8%, Affirm Holdings (AFRM) -11%, Synchrony Financial (SYF) -5.5%.

Exchange stocks were mixed. But online trading platforms suffered. Intercontinental Exchange (ICE) roughly flat, Nasdaq (NDAQ) -2.2%, MarketAxess (MKTX) +2.7%, CME Group (CME) +2.9%, Cboe Global Markets (CBOE) +1.9%. Among online brokerage names, Robinhood Markets (HOOD) -16%, Interactive Brokers (IBKR) -13%, Charles Schwab (SCHW) -6.0%. 

Life insurers, which hold huge portfolios of stocks, bonds, and other assets, slumped, while property & casualty insurers perked up because their businesses aren't as dependent on the economic cycle. Brighthouse Financial (BHF) -5.3%, Corebridge Financial (CRBG) -4.1%, Prudential Financial (PRU) -4.2%, MetLife (MET) -3.6%. P&C names: Travelers (TRV) +1.0%, Chubb (CB) +2.5%, American International Group (AIG) +0.8%, Allstate (ALL) -0.1%.

The behemoth of investing and insurance held up. Berkshire Hathaway (BRK.B) B shares rose 0.4%, while its A shares (BRK.A) gained 0.5%.