Bank Shares Slump After Fed Move

Federal Reserve headquarters in Washington, DC.

NEW YORK CITY—Although the Federal Reserve’s decision last week to hold the line on interest rates had been expected, nonetheless it hit banks where it hurt—in share prices. Trepp LLC’s Matt Anderson wrote Tuesday that bank share prices fell for the third consecutive week after the Fed’s announcement. Investors are now holding out hope for a possible rate hike later this year, although some members of the Federal Open Market Committee have stated they don’t expect any more than a single increase during 2016.

“The low rate environment has caused bank share prices to fall,” writes Anderson, managing director at Trepp. “Large banks’ share prices fell 3.1% for the week, while regional bank shares fell by 3.3%. With the slump in bank shares in its third week, the cumulative drop in prices reached 8.0% for the largest banks and 6.3% for regional banks.”