By Andrew Welsch
Bank, brokerage, and wealth management stocks slumped Friday as investors worried about disruption from artificial intelligence, the potential ramifications of resurgent inflation, and possible troubles in private credit.
The KBW Nasdaq Bank Index dropped 4.9%, while the Vanguard Financials ETF, which tracks a broad basket of financial services companies, was down 2.3%. The bellwether S&P 500 index was down 0.4%.
Among stocks hardest hit were Morgan Stanley and Goldman Sachs, which were down 6.2% and 7.4%, respectively. Goldman's stock had its worst day since since April 4, when it fell 7.9% amid a broad market rout following President Donald Trump's imposition of sweeping tariffs.
Consumer banks that have large wealth management operations were also hit on Friday: Bank of America fell 4.8%, while Wells Fargo dropped 5.6%. Elsewhere, shares of LPL Financial, which operates a large independent-broker dealer and provides other services to financial advisors, were down 6%.
Charles Schwab, Robinhood, and Interactive Brokers were down 2.4%, 4.5%, and 4.4%, respectively. All three operate large self-directed brokerage platforms for millions of investors.
Although brokerage and wealth management companies benefited last year from a bull market that enticed investors to open accounts and trade more frequently, their luck has changed this year. Shares of LPL, Schwab, and other wealth management companies were hit hard earlier this month on concerns about AI disruption after fintech Altruist made its debut a new tax planning tool for its AI platform, called Hazel.
Investors have been broadly weighing the impact of new technologies, and different sectors -- such as software and insurance -- have sold off as potential threats have come into view. A research report from Citrini Research, which painted a potentially dire future of AI-related mass layoffs and economic havoc, went viral last weekend.
Gene Goldman, chief investment officer at Cetera Investment Management, says investors are increasingly worrying that AI may turn into more of a disruptor than a productivity enhancer. "Weakness in industries characterized by high margins and strong returns on invested capital, such as software, financial services, fintech, and digital advertising/media, suggests markets are beginning to price in that risk, " Goldman wrote in a note on Friday.
Payments company Block may have reignited doomsday concerns on Thursday when it said that it was laying off 40% of its workforce, or more than 4,000 employees, as part of an AI remake. "The core thesis is simple," Jack Dorsey, the company's founder, said on its earnings call Thursday. "Intelligence tools have changed what it means to build and run a company. We're already seeing it internally. A significantly smaller team using the tools we're building can do more and do it better."
Shares of the payments company, which owns Square, rose 18% on Friday.
Although banks' performance metrics have been holding up, investors have also been weighing a complicated macroeconomic outlook that includes stubborn inflation and uncertainty around trade policy. On Friday morning U.S. producer prices came in higher than expected due to prices in the services sector. It could give the Federal Reserve additional reasons to be cautious in cutting rates further.
Alternative asset manager stocks were also hit on Friday, following concerns about a downturn in private credit. Blue Owl Capital's stock fell 6% on Friday. Apollo Global Management dropped 8.6%, its largest decrease since April 4, when it fell 12%.
Earlier this month, shares of Blue Owl fell after it said it was liquidating $1.4 billion in assets. On Monday, JPMorgan Chase CEO Jamie Dimon cautioned investors about risks in private credit, warning "there's always a surprise in a credit cycle."
Wells Fargo analyst Mike Mayo wrote Friday that credit issues are a reminder that credit cycles have not been eliminated, though risks may lie where investors aren't expecting. "[W]e continue to note that banks have grown loans this decade well below GDP, implying that larger risks lie among unregulated shadow banks," he wrote.
Write to Andrew Welsch at andrew.welsch@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
February 27, 2026 16:47 ET (21:47 GMT)
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