Whether it’s the latest effort by the Federal Reserve to pump some liquidity into the US economy or it’s the IMF’s statement that Europe’s banks need another $440 billion or so to capitalize its banks, the effect is to crush financial shares at this morning’s market open.
Bank of America Corp. (NYSE: BAC) shares have posted a new 52-week low in the opening minutes, as have J.P. Morgan Chase & Co. (NYSE: JPM), Goldman Sachs Group, Inc. (NYSE: GS), Citigroup Inc. (NYSE: C), and Morgan Stanley (NYSE: MS). Only Wells Fargo & Co. (NYSE: WFC) is managing to stay above its 52-week low.
Yesterday’s announcement from Fed chairman Ben Bernanke that the bank would initiate its “Twist” did not offset his other comment that the Fed expects the economic slump to last for years. Among businesses expected to be hardest hit are the big banks. And that’s contributing to today’s slide.
The IMF’s warning that the sovereign debt crisis in Europe requires more capitalization of the region’s banks put a damper on European markets as well. Every stock on London’s FTSE has dropped today as investors dump equities and head for safety.
The retreat is not to gold or oil, both of which are down this morning. WTI crude is down nearly -6% at just above $80/barrel, while gold is down nearly -4% at $1740.20/ounce. Brent crude is also down at around $106/barrel.
The retreat appears to be to the 30-year US Treasuries and the dollar. The 30-year note is up nearly 2% and the dollar is up nearly 2% against the euro and more than 1% against the British pound. Even the Swiss franc is trading lower. Only the Japanese yen is holding its own vs. the dollar this morning.
After the first half-hour of trading, BofA is down nearly -4% at $6.14, having recovered from a morning low of $6.03. JP Morgan is trading at $29.03, down more than -4%, but above a new 52-week low of $28.81. Goldman Sachs is down more than -4%, at $93.59, just above a new 52-week low set earlier this morning of $93.50. Morgan Stanley has set a new 52-week low of $12.97, down more than -6%. Wells Fargo has managed to stave off a new low but is still down around -3%, at $23.00, in a 52-week range of $22.58-$34.25.
Tags: financial services, financial services stocks, banking, bank stocks, BAC, JPM, C, WFC, GS, MS