A slump in U.S. bond yields sent bank stocks spiraling downward as fears that a recession would set in revived.

Bank of America (BAC) - Get Report, Citigroup (C) - Get Report and JPMorgan Chase  (JPM) - Get Report led the way down with double-digit declines amid a market rout.

Taking a toll on bank-stock prices was the collapse in the yields of U.S. bonds. Securities across the yield curve sank below 1% for the first time, Bloomberg reported. The 10-year U.S. treasury yield fell to 0.434%, down 0.33 percentage point. 

Higher rates tend to benefit banks' profit margins. They earn more from loans than they pay out as interest on customers' deposits.

A new research report by Morgan Stanley on bank stocks cited the rising potential for a recession.

Morgan Stanley analyst Betsy Graseck wrote that OPEC's decision over the weekend to slash oil prices, combined with growing coronavirus quarantines worldwide, "drive up recession probability."

Graseck slashed her target prices on bank stocks and earnings. She cited the banks' exposure to the energy sector, falling interest rates, and disruptions to service-based industries as countries impose quarantines to stop or slow the spread of the deadly Covid-19, Bloomberg reported.

Shares of Bank of America took one of the biggest hits, dropping 15% to $21.81, followed by Citigroup, off 13% to $53.55, and JP Morgan, which fell 12% to $95.46.

Also caught in the undertow were Morgan Stanley (MS) - Get Report, down 11% to $37.13, PNC Financial (PNC) - Get Report, off 11% to $101.64, and Goldman Sachs (GS) - Get Report, down 10% to $173. Wells Fargo (WFC) - Get Report gave up 10% to $33.43 a share.