From Nasdaq:

The collapse of Silicon Valley Bank just nine months ago was followed closely by regional banking fears, with extensive media coverage that has now disappeared. However, concerns remain based on the Q4 earnings releases of 15 regional banks today, which showed a declining trend in profits, particularly among Truist Financial, M&T Bank, and Northern Trust.

The top six regional banks by market cap experienced a combined average decline in profits of 31.5%. This exposes a worrying trend, as a few months ago, regional banking was a major concern. The financial world and the real world seem to be disconnected, with the stock market thriving while signs of trouble, such as struggling commercial real estate and a mortgage slowdown, affect the real economy in which regional banks operate.

Stock market and economic disconnects cannot last long. Regional banks operating in struggling sectors are being affected, making a correction in stock prices almost inevitable before long. This shows that the strength of the economy doesn’t support market pricing and signals upcoming stock adjustments.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



Read more: Worrying Signs from Regional Bank Earnings