Bank stocks slumped after an escalation in U.S.-China trade tensions and a drop in bond yields revived worries over U.S. economic growth.

Bank stocks slumped Monday after an escalation in U.S.-China trade tensions and a drop in bond yields revived worries over U.S. economic growth.

Investors monitor financial shares because bank stocks are perceived to reflect the health of the broader U.S. economy. The renewed fears hit everything from large to small lenders.

The KBW Nasdaq...