The financial sector was the hardest hit of the S&P 500’s 11 key sectors, as banks stocks were weighed down by a sharp drop in longer-term Treasury yields. The SPDR Financial Select Sector ETF XLF, -1.17% dropped 1.3% in afternoon trade, with 63 of its 68 equity components trading lower. Among the sector tracker’s most heavily weighted banks, shares of J.P. Morgan Chase & Co. JPM, -0.98% fell 1.5%, Bank of America Corp. BAC, -1.30% gave up 1.6%, Wells Fargo & Co. WFC, -0.67% shed 0.5%, Citigroup Inc. C, -2.39% lost 2.6% and Goldman Sachs Group Inc. GS, -1.78% slid 1.8%. The yield on the 10-year Treasury note declined 7.1 basis points (0.071 percentage points) to 2.864%, as economic distress in Turkey, and the spillover effect it is having on Europe, drove investors into buying safe-haven U.S. Treasurys. Yields fall as bond prices rise. Falling longer-term yields can hurt banks’ profits ss the spread made between rates tied to longer-term assets, like loans, and shorter-term liabilities narrow. The financial ETF has lost 1.2% over the past three months while the Dow Jones Industrial Average DJIA, -0.77% has gained 2.2%.
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