An index of U.S. consumer sentiment unexpectedly declined in early August to 63.2 from 66.0 in July. That was the lowest reading since March, and is significantly worse than the 69.0 that was expected by economists surveyed by MarketWatch. See full story.
The Financial Select Sector SPDR (XLF 14.24, -0.09, -0.63%) , an exchange-traded fund that tracks all of the financial-services companies in the S&P 500 index, declined 0.6%.
Meanwhile, the KBW Bank Index edged up 0.2%.
Bank of America (BAC 17.39, +0.39, +2.29%) shares gained 2.3% to close at $17.39, while Citigroup (C 4.04, -0.02, -0.49%) , Wells Fargo (WFC 27.73, -0.15, -0.54%) , J.P. Morgan Chase (JPM 42.45, -0.45, -1.05%) and US Bancorp (USB 22.49, -0.06, -0.27%) all fell by 1.1% or less.
The KBW Bank Index has jumped 23% in the past month, while the Financial Select Sector SPDR has rallied 19%.
Bank stocks have risen after the sector's second-quarter results suggested that consumer loan delinquencies are starting to stabilize as the recession eases. Indeed, Citi shares were upgraded by analysts at Banc of America Securities-Merrill Lynch on Friday, partly because of stabilization in consumer credit delinquency trends.
The sector got another boost Thursday after a regulatory filing showed that Paulson & Co., one of the world's largest hedge funds, run by John Paulson, bought big stakes in lenders like Bank of America during the second quarter.
It's not clear whether Paulson still holds the stakes, but some investors took the filing as a sign that the sector is gaining support among some top institutions. See full story.
Friday's consumer sentiment report suggests that the financial health of American consumers may not be stabilizing as much as bank investors hope. See story on threats to bank stock rally.
Colonial BancGroup (CNB 0.41, -0.06, -11.91%) shares dropped 12% to 41 cents before being halted Friday morning.
Colonial may become the largest bank failure so far this year. BB&T Corp. (BBT 28.23, +2.43, +9.42%) is expected to take over the Montgomery, Ala.-based bank as early as Friday, after the Federal Deposit Insurance Corp. seizes the lender, according to reports by Bloomberg News and The Wall Street Journal's online edition. See story on possible failure of Colonial.
BB&T shares jumped 9.4% to close at $28.23.
Shares of E-Trade Financial (ETFC 1.35, -0.05, -3.57%) , the discount broker that has it's own troubled bank, fell 3.6% to close at $1.35.
Hedge fund firm Citadel Investment Group in a regulatory filing said it has entered into a trading plan allowing it to sell as many as 120 million E-Trade shares between the end of August and late October.
Citadel said it sold nearly 14 million shares of E-Trade earlier this week. The firm, run by Ken Griffin, invested heavily in the online broker in late 2007.
Genworth Financial (GNW 8.28, -0.47, -5.37%) fell 5% to close at $8.28. Citigroup analyst Colin Devine downgraded the insurer to sell from hold, citing "a very uncertain earnings outlook and capital position."
No comments:
Post a Comment