The financial sector Tuesday morning was on track for one of its worst sessions since the March 2023 regional banking crisis. Jim Cramer sees the decline in one bank stock as a buying opportunity.
The financial sector Tuesday morning was on track for one of its worst sessions since the March 2023 regional banking crisis. Jim Cramer sees the decline in one bank stock as a buying opportunity. The news Shares of American banks sank as President Donald Trump's tariffs went into effect on key trade partners, escalating concerns about the global economy. The S & P 500 plunged on the open and worked its way lower in late-morning trading after 25% tariffs went into effect on Canadian and Mexican imports. Trump also imposed an additional 10% tariff on Chinese imports on top of the 10% duty already in place. All three countries promised retaliation. The overall market bounced off its lows of the day in afternoon trading. Investors hope to hear more about the president's tariff plans and other global and domestic policies when he addresses a joint session of Congress Tuesday night. WFC GS YTD mountain Wells Fargo vs. Goldman Sachs YTD Tuesday's drop in the market, which pared its losses in the afternoon, highlighted a big reversal for bank stocks in 2025. Wells Fargo was the Club's biggest laggard on the session — declining more than 7% early before trimming some of those losses Tuesday afternoon. The stock was trading about 9% below its record-high close of $81.42 on Feb. 6. Goldman Sachs fell as much as 6% on Tuesday morning before cutting those declines in half. The Club stock was trading about 12% below its $672.19 record-high close from Feb. 18. Shares of Wells Fargo and Goldman Sachs were both still modestly higher year to date. Deutsche Bank analysts described the sector's outperformance earlier in the year as "likely due to the anticipated pickup in volume-related growth (both in investment banking and loans) and de-regulation" in a Tuesday note to clients. Trump's approach to relaxing federal business regulations has been viewed as a positive for the banking sector and for companies looking to merge or go public. Big picture The escalation of Trump's trade war comes at a time of growing concern for the U.S. economy following a string of disappointing data releases. Early economic data for the first quarter of the year pointed to negative gross domestic product growth, according to the Atlanta Fed's GDPNow tracker. Meanwhile, consumer confidence last month saw its steepest drop since August 2021 . The labor market has also shown more weakness, with fewer-than-expected nonfarm jobs added in January. The government's February employment report is out on Friday . Bottom line New investors should capitalize on the recent dip in Wells Fargo stock, Jim said Tuesday. That's because the market's reaction is bleeding into shares of Wells even though it will be less impacted by potential economic distress than other bank names. Wells Fargo's stock performance doesn't rely on a rebound in investment banking as much as Goldman Sachs does, which could take longer than expected due to increased macroeconomic uncertainty from the trade war. In fact, Wells Fargo garners more of its revenue from net interest income (NII) than fees from Wall Street dealmaking. "I do think that this is a buy for those who don't have it," Jim added. To be sure, the Club does not plan on purchasing more Wells Fargo right now. Our position is large enough at a 4.4% weighting in the portfolio. It's the second-largest holding following Apple 's 5.4% weighting and neck-and-neck with Meta Platforms and Amazon . We rarely want to see any single holding go too much above a 5% weighting. Investors shouldn't forget that Wells Fargo still has a key catalyst on the horizon: the expected removal of the $1.95 trillion asset cap that the Fed imposed in 2018 after a series of misdeeds under previous management. While the timing of such a move is uncertain, it's a key reason we believe so strongly in the stock. Once the cap is gone, Wells will be able to invest further in other revenue-generating businesses like investment banking, trading, and capital markets. (Jim Cramer's Charitable Trust is long WFC, GS, AAPL, META, AMZN. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.