Magazine article American Banker

Market Drop Hurts Bank Tech Stocks

Magazine article American Banker

Market Drop Hurts Bank Tech Stocks

Article excerpt

The recent erosion in the prices of bank technology stocks had just begun to show signs of easing when the stock market began its broad-based decline.

"It has been a tough week in the market," said F. Mark D'Annolfo, analyst at Adams, Harkness & Hill, Boston. "Whether you are looking at the last week or year-to-date, technology has gotten really hammered, particularly higher-multiple stocks."

As for the overall market, the Dow Jones industrial average was 230 points lower for the week in late trading, while the Nasdaq composite, reflecting the prices of many banking technology stocks, was off 16 points on the week. The Nasdaq has lost more tha n 11% since its peak of 1,400 points in January.

Goldman Sachs' technology index of U.S.-traded firms is at its January level of 115 points.

Much of the recent stock market pressure stemmed from the Federal Reserve's move March 25 to hike the overnight bank lending rate by a quarter point, to 5.5%, in an effort to keep inflation under control.

"People fundamentally like the (technology) companies" but feel the need to keep "cash balances a little higher than normal," Mr. D'Annolfo said.

The shares of Transaction Systems Architects Inc., Omaha, fluctuated wildly last week-for no discernible reason, according to analysts-and were trading 81.25 cents lower late Friday. Transaction Systems Architects is down more than 30% since Jan. 1.

Gary R. Craft, analyst at Robertson, Stephens & Co., San Francisco, said the company, along with other electronic commerce providers who recently went public, suffered from "a very weak sector in technology generally. …

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