Bank stocks are plunging as global equity markets continue their sell-off, driven by a flattening yield curve and trade-war tensions.

The KBW Bank Index , which includes all of the biggest firms, drop into bear market territory after recording its largest two day drop since June 2016 — the month of the Brexit vote. Goldman Sachs was the best off on Thursday, and it still fell more than 1.5%.

The spreads between Treasurys of varying maturities — frequently referred to as curves — have inverted in recent days. That includes the 2- and 5-year relationship, as well as the difference between 3- and 5-year Treasurys. Often viewed as a late-cycle signal, this type of inversion has frequently preceded economic recessions throughout history.

The impact on bank stocks has been stark as the flatter yield curve shrinks the spread between the rate at which banks borrow and which they lend. This hurts the firms' profitability, since they make money by charging borrowers higher rates.

Those profitability concerns were upfront and center for Citigroup on Wednesday. The firm's CFO, John Gerspach, warned the company is likely to see fourth-quarter trading revenues decline on a year-over-year basis. He also said recent market volatility has hurt the firm's fixed-income and investment banking businesses.

Citigroup's stock plummeted as much as 6% on Thursday, adding pressure to the broader banking sector, which already had its hands full with the yield curve situation.

Other lenders have been hit hard by market volatility this year, and their stocks are also falling sharply.

On Tuesday, JPMorgan CEO Jamie Dimon said he expected trading results to be flat compared with last year. The bank's stock fell 3.6% on Wednesday.

The S&P 500 has seen losses for other banks including a 4.2% drop for Morgan Stanley and a 4.1% loss for Bank of America, while Wells Fargo is trading 3% lower.

More broadly, markets have been under pressure in recent days amid fears about economic growth and renewed trade war concerns.

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