U.S. bank shares, brutalized since the early March collapse of Silicon Valley Bank, may have further to drop before investors need to worry about economic growth, according to Oxford Economics.
A look at 150 years of past bank failures indicated that recent stress in bank stocks likely isn’t yet enough to signal fallout to the economy. However, GDP fell about 3% over the same stretch when bank shares tumbled 30%-60% in past episodes of bank failures, and around 8% when they shed over 60%.While overall U.S. bank stocks were off about 20% since early March , “the fall to date is only around a third of the typical declines in bank stocks seen in bank failure episodes during the global financial crisis,” according to Thompson’s metrics.
With many regional banks facing pressure from lost deposits and underwater securities on their balance sheet, the White House on Thursday said it was monitoring short-selling activity on bank shares.