Big bank stocks get dumped again

JPMorgan Chase and US Bancorp extend Thursday's decline; Wells Fargo shoots higher after dividend cut.

EMAIL  |   PRINT  |   SHARE  |   RSS
 
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
By David Ellis, CNNMoney.com staff writer

Money Summit 2009
Ali Velshi & the CNN Money Team take on the dismal February jobs report. How will the job market recover?
Watch a special AC360
Friday at 11 p.m. ET

NEW YORK (CNNMoney.com) -- Just a day after Citigroup stock dipped below $1, bank stocks endured another selloff Friday, even as investors were encouraged about the strength of West Coast banking leader Wells Fargo.

Shares of US Bancorp (USB, Fortune 500) and JPMorgan Chase (JPM, Fortune 500) both fell Friday, declining 2% and 4% respectively. Bank of America (BAC, Fortune 500), which has come under heavy fire recently for its purchase of Merrill Lynch last fall, ended the day narrowly lower.

One of the most closely-watched sector indexes, the KBW Bank Index, closed nearly 2% lower Friday and finished the week down 23%.

Bucking the trend was Wells Fargo (WFC, Fortune 500), whose shares gained 6% during the trading session.

Investors were encouraged by comments from CEO John Stumpf, who indicated that the bank's operating results for the first two months of the year were strong.

His remarks, however, came as the San Francisco-based banking giant unveiled plans to cut its quarterly dividend 85%. The company said it expected the move to save $5 billion annually and help the firm grow its market share at a time when some of its peers are receiving extensive assistance from the government.

"This was a very difficult decision but it's absolutely right for our company and our shareholders," Stumpf said in a statement.

Ongoing fears about the health of the nation's largest banks have weighed not only on financial stocks, but the broader market. Major indexes finished at their lowest levels in nearly 12 years Thursday, hurt, in part, by worries about the big banks.

Stocks tumbled to new lows Friday afternoon on the latest jobs report, which revealed that the unemployment rate climbed to 8.1% - its highest level in 25 years.

"Some days are better than others for financials," said Lawrence Creatura, a fund manager at Federated Investors in Rochester, New York. "Today is more of a case where financials are going out with a tide that is taking most sectors with it."

But what continues to trouble investors in financials are banks' exposure to soured mortgages and worries about rising losses tied to other consumer loans.

Many experts are betting that loan losses are likely to increase as a result of the nation's souring economy. As a result, some analysts have warned that the entire banking sector could require as much as $1 trillion or more in additional capital.

Federal regulators are currently "stress testing" the nation's 19 largest banks in order to determine whether future bailouts might be needed and how costly they may be.

Those tests, which are expected to be made public no later than the end of April, will estimate potential losses over the next two years and the bank's ability to absorb such losses. To top of page

Features
They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
50 years of the Ford Mustang Take a drive down memory lane with our favorite photos of the car through the years. More
Cool cars from the New York Auto Show These are some of the most interesting new models and concept vehicles from the Big Apple's car show. More
8 CEOs who took a pay cut in 2013 Median CEO pay inched up 9% in 2013 to $13.9 million. But not everyone got a bump last year. Here are eight CEOs who missed out. More
Sponsors
Worry about the hackers you don't know 
Crime syndicates and government organizations pose a much greater cyber threat than renegade hacker groups like Anonymous. Play
GE CEO: Bringing jobs back to the U.S. 
Jeff Immelt says the U.S. is a cost competitive market for advanced manufacturing and that GE is bringing jobs back from Mexico. Play
Hamster wheel and wedgie-powered transit 
Red Bull Creation challenges hackers and engineers to invent new modes of transportation. Play

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.