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While high bond yields are pressuring equity markets, overall, the financial sector is the weakest of the 11 sectors in the S&P 500 on Tuesday after S&P Global Ratings downgraded ratings on five regional banks due to tougher operating conditions.
The SPDR S&P Regional Banking ETF (NYSEARCA:KRE) dropped 2.0% in midday trading and the SPDR S&P Bank ETF (NYSEARCA:KBE) slid 1.7%. The Financial Select Sector SPDR Fund (NYSEARCA:XLF) is off 0.7%.
Comerica (NYSE:CMA) and KeyCorp (NYSE:KEY), both of which the S&P downgraded, were among the biggest decliners in bank stocks. KeyCorp fell 3.1% and Comerica declined 3.4%.
Zions Bancorporation (NASDAQ:ZION) stock dipped 3.4%. S&P affirmed the company’s BBB+ long-term issuer rating and kept its outlook at stable.
Other significant moves were made by large regionals Huntington Bancshares (NASDAQ:HBAN) -2.5% and Regions Financial (NYSE:RF) -3.4%.
Banks stocks that fell the most during the March banking turmoil also saw renewed weakness on Tuesday. PacWest Bancorp (NASDAQ:PACW) -2.8%, Western Alliance (NYSE:WAL) -2.4%, Metropolitan Bancorp (NYSE:MCB) -1.9%.
First Horizon (NYSE:FHN), whose planned acquisition by TD Bank (NYSE:TD) fell apart in May, fell 2.9%.
