U.S. Banks Indices Poised to Fall Further Following Fitch, Moody’s and S&P Global’s Industry Downgrades

All over again, intestors are compelled to watch the increasingly gloomy prospects for Dow Jones U.S. Banks Index launched on Feb 14, 2000. S&P Dow Jones Indices have been the largest global resource for vital index-based benchmarks, who were also the creators of “iconic financial market indicators”, such as the S&P 500 ® and the Dow Jones Industrial Average®.

On August 15, Fitch Ratings warned it may downgrade the U.S. banking industry’s credit rating from AA- to A+. Moody’s had earlier in August also cut the ratings of 10 banks by one notch and placed 6 banking giants, including Bank of New York Mellon, US Bancorp, State Street and Truist Financial on review for potential downgrades.

Finally, following similar move by both Fitch Ratings and Moody's, S&P Global also decided to downgrade several U.S. banks' credit ratings and revised their outlooks, warning that funding risks and weakening profitability could test the sector's credit strength.

Standard & Poor's downgraded Associated Banc-Corp and Valley National Bancorp due to funding risks and increased reliance on brokerage deposits. UMB Financial Corp, Comerica Bank and Keycorp were also downgraded due to large deposit outflows amid essentially helpless higher interest rates.

S&P said in a summary statement that sharply higher interest rates are putting pressure on funding and liquidity at many U.S. banks, adding that as long as the Fed "quantitatively tightens monetary policy," insured banks will continue to fail."