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Charles Schwab stock just notched its worst month since 1987 as fears of banking contagion flared

Charles SchwabA Charles Schwab branch in New York City.

Photo by James Leynse/Corbis via Getty Images

  • Shares of Charles Schwab tumbled 33% in March.
  • This resulted in more than $47 billion of the company’s market value being wiped out.
  • The stock’s weak performance comes as Schwab navigates broader banking turmoil and a high-interest-rate environment.

Charles Schwab’s stock just had its worst month in nearly 35 years on mounting concerns around banking contagion and high interest rates continue to weigh on investor sentiment.

Shares of the brokerage giant fell 33% between in March, its weakest performance since the month of the 1987 stock-market crash. That wiped out more than $47 billion of the company’s market value.

The losses came amid a crisis of confidence in the sector after a slew of high-profile failures like Silicon Valley Bank, with concerns only amplifying when UBS was forced to buy out Swiss lender Credit Suisse. In the case of SVB, the firm was left flat-footed by interest-rate hikes that resulted in risk-free government securities yielding more than what they were offering clients.

While analysts and the company’s own CEO have sought to distance Schwab from SVB-adjacent turmoil, stock investors have been spooked by the roughly $28 billion in bond losses the firm had on paper at the end of 2022, which are also reflective of higher rates. But, unlike SVB, Schwab said in a recent release that there’s a “near-zero chance” the firm will have to sell the portfolio. 

Still, some analysts have tempered their future expectations for the stock. On March 30, Morgan Stanley analyst Michael Cyprys cut his “overweight” rating on the stock to “equalweight” and slashed his 12-month price target to $68, down from $99. Schwab stock traded flat on Monday, down less than 0.1% to $52.34.

“While clients aren’t leaving and SCHW has other sources of liquidity, earnings face more pressure than we had expected,” Cyprys said in an accompanying note to clients.

It’s been a tough time for bank stocks across the board. Bank of America, Wells Fargo, Prudential Financial, and PNC Financial Services all had their worst month since 2020. 

Read the original article on Business Insider
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