** Large-cap U.S. bank stocks drop in premarket trading tracking broader markets .N, after U.S. government shuts down much of its operations
** JPMorgan Chase JPM.N, the largest U.S. bank by assets and often viewed as a bellwether for the sector and the broader economy, was last down 0.6% before the bell
** Citigroup C.N falls 0.7%, while investment banks Morgan Stanley MS.N and Goldman Sachs GS.N down 0.5% each premarket
** Wells Fargo WFC.N and Bank of America BAC.N down 0.6% and 0.5%, respectively
** If the shutdown drags on, activity in the IPO market and debt or equity underwriting is expected to be impacted, potentially hitting investment banking fees
** Banks also rely heavily on economic data releases to gauge the health of the economy and the consumer, which could be delayed or halted during a shutdown
** "Bond markets and the outlook for the Fed rate hang in balance as a shutdown could mean that the jobs data due on Friday is unable to be issued, a key data point for investors looking to plot rates' trajectory," says Emma Wall, chief investment strategist at Hargreaves Lansdown
** As of last close, S&P 500 Banks Index .SPX up ~23% YTD, outperforming the benchmark S&P 500 .SPX up ~13.7%
(Reporting by Manya Saini in Bengaluru)
((Manya.Saini@thomsonreuters.com))
