What happened

After its first multiday rally since early February, the stock market is in the red on Friday. As of 11:30 a.m. EDT, the Dow Jones Industrial Average and the S&P 500 benchmark indexes were both down by about 3%.

As has been rather typical during the recent market turbulence, bank stocks are doing even worse. Checking in on the "big four" U.S. banking institutions, Wells Fargo (WFC 1.59%) and Citigroup (C 0.80%) are both down by 4% today, while JPMorgan Chase (JPM 0.91%) and Bank of America (BAC 1.32%) are both off by well over 5%.

Couple at a desk signing paperwork.

During recessions, demand for loans can decline sharply. Image source: Getty Images.

So what

After the relatively strong market sentiment of the past few days, it appears that coronavirus recession concerns are back on investors' minds. Recessions lead to a decrease in demand for loans, and typically produce an uptick in delinquencies and charge-offs on existing loans as consumers struggle to pay their bills.

It's also important to note that interest rates are falling today, with the benchmark 10-year Treasury yield down by more than 6 basis points to less than 0.75%. Since banks make money by charging interest on loans, lower rates are generally a negative catalyst.

Now what

We're certainly in a recession, but the key questions on bank investors' minds are how long it will last, how deep it will be, and will the stimulus package enable consumers to keep paying their bills. Until we start to get some clarity on those things, volatility isn't likely to go away anytime soon.