Economically sensitive bank stocks slide after data signals slowing labor market

Economically sensitive bank stocks .SPXBK tumble 2.5% amid a selloff on the Wall Street after data showed U.S. employment growth slowed more than expected in July

Major U.S. banks JPMorgan Chase JPM.N, Wells Fargo WFC.N, Goldman Sachs GS.N, Morgan Stanley MS.N, Citigroup C.N, and Bank of America BAC.N shed between 1.8% and 2.5%

A deterioration in labor market conditions has put a September interest rate cut by the Federal Reserve back on the table

When interest rates fall, banks earn less on loans relative to what they pay on deposits, narrowing their net interest margins

Businesses and consumers also borrow less, reducing banks' interest income in a slowing economy

Nasdaq regional banking index .KRX sheds 2.7%

YTD, SPXBK up 12.6% versus 6.1% slide in KRX