US financial sector declines amid AI concerns — Channel NewsAsia
In the United States, the S&P 500 financial sector index fell 2% on September 22, while the S&P 500 bank index declined 3%. Investors reacted to concerns about competition from artificial intelligence, uncertainty surrounding initial public offerings by AI-related companies, and the flattening of the US government bond yield curve, Channel NewsAsia reports, citing Reuters.
Decline in financial company shares
Among the biggest losers were Charles Schwab shares, which fell 6.1%. Ameriprise Financial securities lost 4.4%, while Raymond James declined by more than 3%.
Gabelli Funds portfolio manager Macrae Sykes said market participants began to worry about potential competition in wealth management after Meta Platforms' Muse AI agent overtook ChatGPT in downloads among free iPhone apps.
Yield curve and IPOs
Sykes also pointed to the flattening of the yield curve between short- and long-term US bonds, which could reduce banks' profitability. The difference between the yields on two-year and ten-year US Treasury bonds fell on September 22 to its lowest level since March 2025: during trading, it stood at 17.90 basis points and later at 21 basis points. As recently as August 18, the figure was 55.5 basis points.
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Rick Meckler, a partner at investment company Cherry Lane Investments, noted that higher rates may be a sign of a strong economy, but can also slow it down. Traders increased bets on further rate hikes by the US Federal Reserve.
Postponed offerings
An additional factor was concerns about the IPO market after The New York Times reported delays in offerings by companies linked to AI data centers. Data center developer SB Energy, a subsidiary of Japanese conglomerate SoftBank, postponed the launch of a roadshow to market its planned US IPO. The company had previously planned to begin the roadshow this month. SB Energy did not comment on the information. Nuclear services company Holtec also paused its planned US IPO last week.
At the same time, Macrae Sykes considers the long-term outlook for bank stocks positive, citing the state of the economy, employment, and the sector's fundamentals.
