Bank Stocks Drop As Market Pulls Back Following Historic Rally: What's Going On?

Shares of several bank stocks including JP Morgan Chase & Co JPM, Bank of America Corp BAC and Wells Fargo & Co WFC are trading lower Thursday, reversing gains from the previous session.

What To Know: The move lower is part of a broader pullback in bank stocks following Wednesday's surge, which was fueled by President Donald Trump's unexpected decision to temporarily pause tariffs.

On Wednesday, bank shares rallied alongside the broader market after Trump announced a 90-day suspension on reciprocal tariffs for countries that had not retaliated against U.S. trade measures. The announcement triggered a broad risk-on rally in financial markets, as investors welcomed the easing of trade tensions and the potential for improved economic stability.

Thursday's losses reflect a shift in sentiment as the initial optimism fades. Investors are reevaluating the implications of the policy change, especially as tensions with China escalate.

Trump imposed a steep 125% tariff on Chinese goods, signaling an aggressive stance that could increase global trade friction. Treasury Secretary Scott Bessent framed the move as a correction of long-standing trade imbalances.

While the pause in tariffs initially benefited financial stocks by reducing uncertainty in the economic outlook — which supports lending activity and consumer behavior — the follow-up reaction shows growing caution. The selloff in JPMorgan and other bank stocks suggests markets are adjusting after a one-day rally and considering the broader risks associated with the evolving trade environment.

Price Action: At the time of publication, JPMorgan shares were down 3.48% at $226.49, Bank of America shares were down 3.93% at $35.69 and Wells Fargo shares were down 5.43% at $62.73 according to Benzinga Pro.

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