With Bank of the First Republic to become the youngest lender to collapse renewed concerns about health of the banking sector, the S&P 500 financial data Index is about to fall back below its 2007 peak.

What happened: This is notable given that it took over a decade for the index to recoup losses following the 2008 credit crash. reported Bloomberg.

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The index has been above the 2007 high since January 2021, but if it breaks that barrier, it would send an ominous signal to the broader stock market, the hedge fund manager said Jim Roppelfounder of Röppel Capital Managementaccording to the report.

The reason is that if banks feel pressured to conserve their capital, they are likely to cut back on their lending, which would further weigh on a crisis-hit economy Those of the Federal Reserve sustained rate hikes intends to combat inflation.

“You can’t have a bull market when bank stocks are falling,” Roppel said. “It’s like an Olympic athlete has cinder blocks around his legs,” he added.

Regional bank stocks took big beating last week however, saw a sharp rebound on Friday after investors and traders felt the sell-off was overdone. However, Western Alliance Ban Corporation WHALE The stock is still down over 28% over the past five days PacWest Bancorp PACW has lost over 43% in the same period.

However, broader markets performed mixed. The SPDR S&P 500 ETF Trust SPY lost 0.68% in the last five days during the Invesco QQQ Trust Series 1 QQQ gained 0.25% over the period.

Expert Take: Nancy TenglerChief Investment Officer of Laffer Tengler Investments, said it was too early to get back into stocks of troubled banks, according to the Bloomberg report. “It’s not wise to chase some of these other bank stocks,” Tengler said. “You must drop the falling knife.”

Scott ColyerCEO at Wealth Management Advisorsaid financials should lead the stock market into a sustained uptrend, but noted that was not the case….