KeyCorp Shares Plummet 5.39% as Earnings Pressures, Macroeconomic Uncertainty Weigh

KeyCorp (KEY) shares plummeted 5.39% on October 10, 2025, hitting their lowest level since June 2025 amid intraday losses of 5.50%. The selloff reflects a confluence of earnings pressures, macroeconomic uncertainty, and strategic challenges, as the regional banking giant navigates a volatile market environment.

Recent earnings data underscore mixed signals for KeyCorp. While third-quarter net interest income surged 14% year-over-year to $1.06 billion, driven by strategic reinvestments in higher-yielding assets, a $915 million loss from securities portfolio adjustments in Q4 2024 weighed on overall performance. Loan balances also declined by 8%, signaling broader industry headwinds in commercial lending. CEO Christopher Gorman has projected a 20% increase in net interest income for 2025, emphasizing growth in investment banking and wealth management, but near-term profitability remains under pressure.

Macroeconomic factors further exacerbated the stock’s decline. A court ruling declaring most of President Trump’s tariffs illegal triggered a market-wide sell-off, spiking Treasury yields and volatility while equities faltered. This legal development heightened uncertainty around trade policy and inflation, prompting a 2.6% drop in KeyCorp’s shares within a single trading session. Seasonal trends—September historically being a weak month for equities—compounded the downward momentum, compounding investor caution.

Institutional investor activity also played a role. Recent trades included purchases and sales by European and Canadian funds, reflecting divergent views on KeyCorp’s long-term potential. Analysts have upgraded the stock’s outlook, citing resilience in fee-driven revenue streams and a 4% deposit growth, but the recent selloff suggests lingering skepticism about its ability to stabilize earnings amid economic volatility.

Strategic initiatives, including a focus on wealth management and investment banking, aim to diversify KeyCorp’s revenue base. However, the bank’s exposure to market swings—evidenced by the Q4 2024 securities loss—highlights vulnerabilities in a low-growth environment. With a dividend yield exceeding 4%, the stock remains attractive to income-focused investors, though near-term risks persist as broader economic conditions remain unpredictable.