Banks stumble, pull down Wall Street

Stocks closed broadly lower Monday on Wall Street, giving up their gains from a day earlier. Banks took some of the bigger losses as bond yields fell Tuesday, and energy companies fell along with a steep drop in the price of crude oil.

The S&P 500 lost 0.8%. Stocks of smaller companies, which have far outpaced the rest of the market this year, fell even more. The Russell 2000 index gave back 3.6%.

The drop in bond yields hurt banks because it means lower interest rates on mortgages and other kinds of loans.

Investors continue to be focused on the future outlook for the U.S. economy as millions of Americans get vaccinated every day. Investors are wavering between optimism that coronavirus vaccines that might allow business and travel to return to normal and fears of higher inflation after struggling economies were flooded with credit and government spending.

“The market feels like it is in this inflection point,” said Darrell Cronk, chief investment officer of Wells Fargo Wealth and Investment Management. “It’s a good day for reflection.”

The price of U.S. crude oil dropped 6.2% to $57.76 a barrel, pulling energy companies lower. Energy prices have been steadily climbing this year until recently, as the global economy recovers and oil demand worldwide increases while production remains constrained. Marathon Oil fell 6.6%.

Another drop in long-term bond yields pulled bank stocks lower. When bond yields fall they mean lower interest rates on loans such as mortgages, and weaker profits for banks and other lenders.

The yield of the 10-year Treasury note fell to 1.63%.