US stocks posted their biggest losses in almost two weeks on Monday, as investors reacted to pessimism on the horizon for banks, which have reported booming profits in recent quarters.
Hopes for an expansion in earnings from financials faded with news of weakness in Asia and European markets. JPMorgan Chase reported a third-quarter profit on Friday that met analysts’ expectations, but a number of other major US banks – which are scheduled to report this week – missed forecasts.
The S&P 500 and the Dow Jones Industrial Average fell roughly 0.5 percent in late-morning trading on Monday.
The financial sector has led the S&P 500 to record highs in recent months, as investors bet that major banks will increase profits thanks to regulatory relief and the expanding economy. But the earnings from the large financials banking divisions have been lagging, raising concern that an uptick in interest rates, which could boost loan demand, is not yet forthcoming.