Magazine article American Banker

Stocks: Bank Stocks Slide Further on Bank One's Shortfall

Magazine article American Banker

Stocks: Bank Stocks Slide Further on Bank One's Shortfall

Article excerpt

Bank stocks fell for a second straight day, dragged down by continued fallout from Bank One Corp.'s announcement late Tuesday that its earnings would fall far short of expectations.

After losing $15 billion of its market capitalization on Wednesday, Bank One dropped another 50 cents a share, or 1.2%, on Thursday, to $42.50. Stocks of other large banks also fell. Chase Manhattan Corp. declined $1.50, or 1.75%, to $84; Citigroup Inc., $1.3125, or 2.7%, to $47.6875; and J.P. Morgan & Co., $4.375, or 3.1%, to $134.875.

The Standard & Poor's bank index was off 2.5% and the Nasdaq bank index, 0.60%. The Dow Jones industrial average shed 1.1% and the S&P 500, 1.4%.

Analysts said Bank One's problems set the market's tone, but that banks are also being hurt by prospects of further interest rate increases.

Some analysts attributed the beating taken by Bank One to overly ambitious goals.

"Their expectations got too high," said Joseph Stieven a banking analyst at Stifel Nicolaus & Co. in St. Louis. "It doesn't sound like the bank is falling apart, it's just going to come up short on its earnings."

Investors clearly remained uneasy.

"They look at this as another in a string of earnings disruptions," Mr. Stieven said.

Aside from Bank One, First Union Corp, Hibernia Corp., and Summit Bancorp have cited difficulties this year with loans or growth prospects.

Analysts were uncertain about what's next for bank stocks. …

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