As we’ve been telling you, fears of a spreading global banking crisis weighed on Wall Street Tuesday. Investors feared Britain’s second government bailout in recent months might be a move to fully nationalize some banks in the UK. (The British government has increased its stake in the Royal Bank of Scotland to nearly 70 percent.)
That, in turn, dragged the US stock market lower, with investors looking at the situation with increased concern that we could see a nationalization here in the US, explains Maria Bartiromo on CNBC's Closing Bell. Stocks like Bank of America , Citigroup and JP Morgan all dropped substantially.
Wouldn’t it be nice if the broad stock market would climb, despite financials? Maybe that day is coming!
“You (probably) don’t need the financial stocks to rally for the broad market to rally. You just need them to be functional,” says Zach Karabell. And he’s not the only Fast Money trader who has that opinion. Guy Adami concurs. All that’s needed is --- “for banks to stop the bleeding,” he says.
That’s partly because equity market cap has been eviscerated by the crisis, and now financials are a smaller and smaller percentage of the indexes.
Take a look:
In 2007: Financials were 17.6% of S&P - #1 largest sector
In 2009: Financials were 11.6% of S&P - #5 largest sector