Financial stocks set for broad selloff as Treasury yields keep falling

The financial sector is bracing for a broad selloff Thursday, amid weakness in the broader market and continued declines in Treasury yields. The SPDR Financial Select Sector ETF XLF, -1.80% slumped 1.8% in premarket trading, enough to pace the declines in all of the SPDR ETFs tracking the S&P 500's SPX, -1.32% 11 sectors. Among the financial ETF's most heavily weighted components, shares of Berkshire Hathaway Inc. BRK.B, -1.10% fell 1.4%, J.P. Morgan Chase & Co. JPM, -1.81% shed 2.1%, Bank of America Corp. BAC, -2.45% dropped 2.6%, Wells Fargo & Co. WFC, -1.79% gave up 2.7% and Citigroup Inc. C, -1.85% slid 2.4%. The declines come as S&P 500 futures ES00, -1.38% slumped 1.4% and the yield on the 10-year Treasury note TMUBMUSD10Y, 1.267% was down 4.8 basis points to a 5-month low of 1.271%, amid concerns over future economic growth. Falling longer-term interest rates can hurt bank profits, as they reduce the spread banks earn on longer-term assets, such as loans, which are funded by shorter-term liabilities.