Are stocks really ready to abandon all the ground they won on the back of this year’s interest rate cuts by the Federal Reserve? The S&P financials index on Tuesday closed below its level of January 18. On the next trading day, the Fed cut the Fed Funds rate from 4.25 to 3.5 per cent. A week later it cut to 3 per cent – a drastic step that should make US banks much more profitable.

It is therefore shocking that bank stocks can fall even after such a stimulus.