Stocks: Bank Stocks Hold Steady after Greenspan's Testimony
Talley, Karen, American Banker
Investors in bank stocks mostly stood pat Tuesday after Federal Reserve Chairman Alan Greenspan's testimony to Congress on the economy and financial reform.
Analysts said most of the action in bank stocks had occurred in a broad rally Monday in advance of the remarks. Mr. Greenspan said little to surprise investors, hinting that no action on interest rates is likely and signaling that the Fed is unlikely to change its opposition to broader powers for holding company subsidiaries. (See reports on pages 1 and 30.)
"Yesterday there was some optimism about Greenspan being able to comfort investors," said Kevin Timmons, banking analyst at First Albany Corp. "While he really didn't say anything to spook anyone, there is no real cause for comfort." Bank stocks "reacted by selling off modestly," Mr. Timmons said.
The Standard & Poor's bank index shed 0.24% and the Nasdaq bank index 0.08%.
After jumping Monday in anticipation of the comments, Chase Manhattan Corp. rose 87.5 cents, to $81.875; Citigroup $2.6875 to $58.125; and J.P. Morgan & Co. $2.3125, to $115.4375.
Other banking companies edged back, with Bank One Corp. shedding $1.0625 to $53.1875; First Union Corp. 43.75 cents, to $54; and KeyCorp 6.25 cents, to $32.3125.
Broader markets were generally unmoved by Mr. Greenspan's testimony. The Dow Jones industrial average was off 0.09%, and the S&P 500 fell 0.08%.
"His comments were basically neutral," said Arun Cumar, U.S. equity strategist for Lehman Brothers. "You could see an easing or a tightening, depending on which way the economy goes. …