Bank shares fell broadly on Wednesday amid growing concerns that the recent Republican electoral losses could hinder the party's push to reform the U.S. tax code. They have also been pressured by a flattening yield curve.
The SPDR S&P bank exchange-traded fund (KBE) fell 0.7 percent and notched its fourth straight negative session. Bank of America was among the worst performers in the ETF, sliding 1.5 percent.
The banks fell after Republicans lost key elections in New Jersey and Virginia on Tuesday. These losses increase uncertainty around the GOP's plans to move forward with tax reform.
"Election results last night in Virginia could push Republicans to take a more populist approach on tax legislation, which could limit the scope of corporate tax changes," said Brian Gardner, managing director at Keefe, Bruyette & Woods, in a note.
"The election results could also signal that the House might flip after the 2018 elections, which could lead to Rep. Maxine Waters (D-CA) chairing the House Financial Services Committee. We see that as a negative for financial stocks, especially large-cap banks," Gardner said.