June 1 (Bloomberg) -- Wells Fargo & Co. and Bank of America Corp. led a slump in financial stocks after a surprise increase in the U.S. jobless rate stoked fears of a stalling economy.
Wells Fargo, the biggest U.S. home lender, declined 5.9 percent to close at $30.16 in New York, the most since October. Charlotte, North Carolina-based Bank of America, the second-largest U.S. lender by assets, fell 4.5 percent to $7.02, while American Express Co., the biggest credit-card issuer by purchases, slid 4.3 percent to $53.43.
Lenders are under pressure from a U.S. Labor Department report that payrolls expanded by 69,000 last month, less than the most-pessimistic forecast in a Bloomberg News survey, and the jobless rate rose to 8.2 percent. The data amplified investor concern that Europe’s debt crisis will be a drag on the U.S. economy, and that new banking regulations will pinch revenue.
“If we are headed into a double-dip recession, does credit quality worsen again?” said Nancy Bush, an analyst and contributing editor at SNL Financial, a bank-research firm in Charlottesville, Virginia. “Everybody has a rosy scenario about bank earnings over the next couple of years, and that could get seriously interrupted.”
Insurers also fell as 30-year bond yields plunged to record lows. Bailed-out insurer American International Group Inc. dropped 6.8 percent to $27.21. Sun Life Financial Inc., Canada’s third-largest insurance company, fell 5.5 percent to C$20.14 in Toronto, the biggest decline since October. Falling interest rates reduce investment income while increasing costs from obligations to clients who bought guaranteed investment products.
Every firm in the 24-company KBW Bank Index declined, and the benchmark fell 4.9 percent, the biggest drop in almost seven months. Huntington Bancshares Inc., the Columbus, Ohio-based lender, fell 6.6 percent, the worst in the index. McLean, Virgina-based Capital One Financial Corp., the bank reliant on credit-card lending, slid 5.8 percent.
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