Financials Up as Bear-Market Fears Abate -- Financials Roundup

02/09/18 04:37 PM EST

Banks, lenders and other financial companies rose as fears that a stock-market correction would metastasize into a bear market abated somewhat. The Dow Jones Industrial Average fell by roughly 500 points intraday before rebounding. While most Wall Street strategists say the stock-market correction appears to be a temporary event, thus far, some caution that a prolonged bout of volatility could become a self-perpetuating crisis. "The U.S. equity market is seemingly waking up to the idea that we are in a higher rate environment amid rising inflation and steady Fed hikes," said analysts at brokerage Bank of America Merrill Lynch, in a note to clients. "The equity market sell-off thus far does not alter our outlook for the U.S. economy or monetary policy. However, if it turns into a sustained and broad-based deterioration of financial conditions, it would be a cause of concern."

Consumer inflation data next week will have a big influence on the behavior of Treasury yields and the stock market, said one strategist. A muted inflation report could lead to diminished expectations of rate hikes, weighing on yields. The market shock has prompted a stampede out of equity exchange-traded funds. Bank of America Corp. Chief Executive Brian Moynihan is set to receive a 15% bump in pay for 2017, a year in which the bank hit new profit milestones.

 

-Rob Curran, rob.curran@dowjones.com

 

(END) Dow Jones Newswires

February 09, 2018 16:37 ET (21:37 GMT)

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