US bank stocks head for sixth week of declines: longest streak since 2008

Shares of American banks are heading for a sixth consecutive weekly decline — the longest streak since the 2008 financial crisis. According to Bloomberg, by Friday, October 16, the KBW Bank Index had lost about 1.2% for the week, even though the largest US banks showed strong results in equity trading.

Investors were not convinced by mixed quarterly reports. The banking sector remains under pressure due to high inflation, uncertainty around interest rates, and concerns that artificial intelligence will change profitable areas of the financial business.

Bank stocks are getting cheaper despite strong earnings

The KBW Bank Index, which includes shares of 24 American banks, has been declining for several weeks. Since its August peak, it has lost about 13%, entering stock market correction territory.

Meanwhile, the third-quarter results of the largest banks were mixed.

Goldman Sachs, JPMorgan Chase, and Morgan Stanley exceeded analyst expectations for equity trading revenue. Citigroup and Bank of America, on the contrary, fell short of forecasts in this area.

Overall, the divisions of the five largest American banks earned almost $67 billion on equity trading in the first nine months of 2026. That is about $5 billion more than what their fixed income, currencies, and commodities operations brought in.

According to Wells Fargo banking analyst Mike Mayo, 2026 could be the first year since 2008 when these banks' equity trading revenues exceed revenues from fixed income trading.

But even such figures have not yet been able to change investors' attitude toward the sector.

Why investors are selling bank stocks

One of the main reasons remains expectations regarding the policy of the US Federal Reserve (Fed).

Persistent inflation is fueling concerns that the American regulator will continue tight monetary policy and may keep high interest rates for longer.

For banks, this creates a contradictory situation.

On the one hand, fluctuations in financial markets increase trading activity. Clients buy and sell assets more often, revise investment portfolios, and hedge against risks. Banks earn additional fees and revenues from servicing such operations.

On the other hand, a prolonged period of high rates increases funding costs, puts pressure on asset values, and may slow lending.

According to Mike Mayo, high rates could turn from a factor stimulating trading into an obstacle to further growth. More expensive funding could also postpone corporate mergers, initial public offerings, and bond issuance.

Artificial intelligence added uncertainty

Another pressure factor is investor concerns about the impact of artificial intelligence (AI) on financial services.

New technologies are gradually changing data analysis, customer service, investment research, and other areas of the banking business.

Investors are trying to assess whether traditional banks can maintain their previous profitability in the face of growing automation and competition from technology companies.

So far, this is primarily about expectations and potential risks, not about confirmed declines in bank earnings due to AI.

Trading activity on exchanges continues to grow

The paradox of the current situation is that bank stocks are getting cheaper against the backdrop of high activity among stock market participants.

According to Bloomberg Intelligence, the average volume of stock trading on American exchanges in 2026 grew by 7.5%. In dollar terms, the increase was about 27%.

For large investment banks, this is a favorable environment: they earn on brokerage services, operations of institutional investors, and providing financial services to hedge funds.

However, analysts doubt that such growth in trading activity can continue indefinitely, especially if high interest rates begin to constrain investment and financing more strongly.

Does this mean a repeat of the 2008 crisis

The comparison with 2008 concerns only the duration of the series of weekly declines in the banking index.

It does not mean that the American banking system has already faced a crisis comparable to the events of that time.

During the global financial crisis, banks suffered massive losses on mortgage assets, experienced liquidity problems, and some major financial institutions went bankrupt.

Now the situation is different: the largest banks continue to make profits, and certain areas of their operations show high revenues. However, investors are more cautious about the sector's prospects due to interest rates, inflation, and technological changes.

The sixth straight week of declines will only be officially recorded after the close of Friday trading on October 16. At the time of publication, the KBW Bank Index is only moving toward that result.

Based on materials from: Bloomberg News / Advisor Perspectives, Quartz.