Wells Fargo, Other Bank Stocks Fall as Meta's Muse Adds Fuel to AI Fears — Barrons.com
By Rebecca Ungarino
Shares of some of the largest U.S. lenders logged their steepest declines in months on Tuesday as investors rotated away from the group and into technology stocks.
The moves underscored concerns that artificial intelligence advances could morph into more of a threat than a boost to the financial sector in the long run. Investors' fears mounted over Muse, Meta's personal AI agent, ahead of the company's Meta Connect conference on Wednesday.
While bank executives have touted the ways their businesses are using AI-as part of their call center operations, fraud-prevention processes, junior investment bankers' workloads, and more-investors remain skittish around the likelihood that banks' efforts could fall behind those of nimbler tech companies.
The selloff was notable: JPMorgan Chase, the country's biggest bank, fell 3.4% for its worst day since July. Wells Fargo's stock dropped 3.9%, the largest decline since May.
Meanwhile shares of Bank of America and Citigroup, fell 3% and 2%, respectively. The S&P 500 closed little changed.
Lenders are facing challenges beyond investors' concerns that AI could change consumer behaviors at the expense of traditional banking businesses. Banks' consumer and commercial clients have remained resilient to a degree that has surprised even veteran Wall Street CEOs, but that financial health could fade.
Executives signaled at a financial industry conference held by Barclays last week that growth in core areas such as lending would continue, albeit at a more muted pace.
"We're seeing growth across the corporate and investment bank, and then just continued growth across the card and the auto portfolios. But, I think, the growth rate will get a little bit lower than what we saw in the first half," Wells Fargo finance chief Mike Santomassimo said at the conference on Sept. 15.
On their trading desks, too, banks aren't expecting to produce the same standout results that they have in recent quarters.
Bank of America CEO Brian Moynihan said at the conference that quarterly sales and trading revenue would "be one of the better third quarters we've ever had, but it'll be relatively flat to last year," referencing Wall Street's historically strong trading results in 2025.
His remarks led to a broader decline across banking stocks last week.
The selling on Tuesday was more severe across brokerage stocks, where the fear centers on AI agents prompting customers to shift their money into higher-yielding products than what those firms offer. Charles Schwab and LPL Financial fell 6% and 7%, respectively.
Write to Rebecca Ungarino at rebecca.ungarino@barrons.com
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