Private Credit Fears, War Darken Outlook for US Financial Stocks

Financial stocks are off to their worst start to a year since the Covid pandemic, with investors expecting more pain ahead as worries over everything from private credit to the Iran war roil the troubled sector.

The S&P 500 Financials Index — whose members run the gamut from the biggest US banks to private credit companies — is down 11% this year, on track for its biggest quarterly decline since the beginning of 2020. Losses in some individual names are far greater: shares of Ares Management Corp. and Blackstone Inc. are each down more than 30% year-to-date, while Wells Fargo & Co. is off 20%. Blue Owl Capital Inc., which is not in the index, has slumped more than 40%.