Magazine article American Banker

Bank Shares Finish A Wild Day in Red

Magazine article American Banker

Bank Shares Finish A Wild Day in Red

Article excerpt

Byline: Kevin Dobbs

Talk about roller-coaster rides.

Financial stocks plunged early Tuesday, picking up on the previous day's bloody trading session, but then rallied on assurances from banking companies that their capital positions are better than some have speculated.

Nevertheless, nagging worries about the overall health of the banking sector weighed on investors' minds, traders said, cutting off the rally and sending financial stocks back into the red in late trading.

The KBW Bank Index, which opened down 6% but rose more than 2% in intraday trading, closed down 3.1%. On Monday it tumbled 8.5%.

Concerns about banking and mortgage companies also hurt the broader markets. The Dow Jones industrial average fell 0.9%, and the Standard & Poor's 500 lost 1.1%.

In his testimony before the Senate Banking Committee, Federal Reserve Board Chairman Ben Bernanke said a wide range of risks could slow consumer spending.

"The economy continues to face numerous difficulties, including ongoing strains in financial markets, declining house prices, a softening labor market, and rising prices of oil, food, and some other commodities," he said.

Stuart Simpson, an equity trader at First Horizon National Corp.'s FTN Midwest Securities Corp., said in an interview that several bank stocks were battered so badly Monday that bargain hunters were drawn back to the markets Tuesday.

He also said assurances about capital strength had only a fleeting impact. …

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