What happened

Shares of Bank of America (NYSE:BAC) are down about 5% as of 2:30 p.m. EDT, as banks lead a broad Tuesday decline in stocks.

So what

It seems that a number of factors are at play in the plunge of bank stocks today. Recently, data from the Federal Reserve pointed to a contraction in bank credit, as year-over-year growth in commercial and industrial loans turned negative in February.

Some investors also seem worried that the markets were overoptimistic about a potential cut in corporate income taxes. The Trump administration is having a hard time rounding up support for a GOP-proposed healthcare bill, suggesting that other campaign promises -- corporate tax cuts and infrastructure spending, for example -- may meet similar roadblocks.

Sign on building that spells out "BANK"

Image source: Getty Images.

Now what

More so than many other banks, Bank of America's earnings are highly sensitive to changes in interest rates and lending activity. Since the yield on the 10-year U.S. Treasury Note peaked at 2.62% on March 13, Bank of America's share price has followed the 10-year yield lower.

With a recent reading of 2.43%, lowered yields and declining optimism about higher inflation and interest rates are weighing on the share prices of the most rate-sensitive bank stocks.

Jordan Wathen has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.