Bank Stocks Are Caught in Downdraft on Profit Taking after Five-Day Surge
Padgett, Tania, American Banker
Bank stocks lost altitude on Tuesday as investors took profits after a four- day surge in share prices.
The Standard & Poor's Bank Index gained 2.9% in the four trading days ending Monday, while the Dow Jones industrial average gained 01.1%.
But on Tuesday, the Standard and Poor's bank index shed 0.86%, while the Dow Jones industrial average lost only 0.48%. The S&P 500 fell 0.46% and the Nasdaq bank index - which comprises mostly thrifts - lost 0.39%.
Among the biggest losers were BankAmerica Corp., which declined $1.50 to $87.625; CoreStates Financial Corp., off $1.375 to $47, and Fleet Financial Group, down $1.125 to $47.75.
"A number of the superregionals that were among the strongest performers had some meaningful" declines, said analyst Frank Barkocy of Josephthal, Lyon & Ross Inc. "We are seeing some profit taking."
Mr. Barkocy added that he expects bank stock performance to be uneven in the next two weeks. "There will be periods or opportunities to buy into some of these stocks on weakness as we head into the election period," he said.
Analyst Sandra Flannigan of Merrill Lynch & Co. said that banks stocks have appreciated substantially, even though third-quarter earnings did not exceed expectations.
"We think we are at a stage where it is incredibly important for investors to be choosy," said Ms. …