Financials have been the worst-performing stocks lately, according to Bespoke

U.S. financial-services stocks have been struggling lately.

In an era of higher interest rates, banks have reaped big profits due to consumers' reluctance to move money out of low-interest checking accounts that offer convenience and ready access to money.

But investors are starting to worry that increasing adoption of AI agents could usher in a scenario similar to what Citrini Research envisioned in a viral report published earlier this year. That report was widely credited with inspiring a selloff that wiped away hundreds of billions of market value from software stocks and other names.

Bank stocks have endured a one-two punch over the past few weeks, according to analysts at Bespoke Intelligence Group. It started with warnings from major bank executives like Bank of America's Brian Moynihan, who warned that investment-banking revenue would be lower and trading revenue would likely be flat.

Then, over the past few sessions, the successful launch of Meta's Muse agentic AI app has powered a rally in Meta (META) and semiconductor stocks - while weighing on others. like telecom stocks and, most notably, financials.

The news has seemingly been good for major indexes like the S&P 500 SPX and Nasdaq Composite COMP, as the tech stocks currently in favor hold heavy sway over the direction of those indexes.

Over the past month, a technology-focused S&P 500 ETF XLK has risen by more than 6%, while a similar ETF that tracks financials XLF has fallen by a similar amount. On Tuesday, the S&P 500 information-technology sector finished in record territory, while shares of banks, insurance companies, and asset-management firms finished more than two standard deviations below the 50-day moving average, what Bespoke considers "extremely oversold" territory.

That has made financials the worst-performing stock-market sector lately, Bespoke analysts pointed out in commentary recently shared with MarketWatch.

On Tuesday, financials fell by about 2% in their worst showing since March, according to Dow Jones Market Data, bringing the sector to its lowest level since July.

That could signal an opportunity for investors looking for a bargain buy. Earlier rough patches for financials in 2024 and 2025 were quickly reversed, data show. Although past performance isn't a guarantee of how things might play out in the future, analysts at BofA Global Research believe investors have been reacting to the wrong metric.

Investors have been preoccupied with Muse's impressive adoptions stats. Sensor Tower data cited by BofA showed the app was downloaded more than 2.5 million times during its first two weeks.

But while analysts remain bullish on the long-term promise of AI agents, they cautioned that this was yet another example of "knee-jerk" selling in response to the launch of new AI-powered products and capabilities. Software stocks like Salesforce (CRM) were hit hard earlier this year due to the fear that AI could undermine their business models. They have already clawed back their losses.

While Muse's functionality looks promising, there are as of yet no signs that users are willing to trust it with login credentials for financial accounts and other sensitive personal information that would be needed for agents to perform functions like automatically moving excess capital to a high-yield savings account.

Matt Maley, chief market strategist at Miller + Tabak, said in commentary shared with MarketWatch that he believes financials are looking attractive at these levels.

"Of course, we could still see some more weakness in the group as it digests its recent decline, but we believe it is safe to start nibbling away on these stocks once again," he said.

-Joseph Adinolfi