Brokerage Stocks Getting Hit With NYSE

If you looked at the brokerage firm stocks today, you’d have no idea the market was up.

Morgan Stanley (MS), Merrill Lynch (MER), Bear Stearns (BSC), and Goldman Sachs (GS) are all down.  They have made some inroads here for a small recovery, but this was very out of whack.  Bank of America (BAC) wasn’t part of the carnage, so it looks like some traders may be taking year-end profits very early after seeing a huge run.

If you look at the volume here with about 2 hours to the close there isn’t exactly a huge amount of selling.  You could say it is simply a buyers’ strike, but for it to be in most of the big names it just looks off.  Here is the volume in the names.

MS: Volume 2,985,100; Avg Vol (3m) 4,055,070
MER: Volume 3,374,900; Avg Vol (3m) 4,841,100
BSC: Volume 1,443,100; Avg Vol (3m) 1,555,460
GS: Volume 4,161,500; Avg Vol (3m) 4,969,790

The true guilty party here may be the exchange stocks.  Since J.P.Morgan downgraded the NYSE (NYX) rating from Outperform to Neutral, whose shares are down 5.6% at $95.50 today.  It isn’t from the economic numbers earlier because those would be affecting others too.  The tie in here is obviously tied to the exchange weakness.  NASDAQ (NDAQ) shares are down 2% at $39.06.  Oddly enough shares of market making Knight Capital (NITE) are up $0.03 at $17.44, but had been lower.  Specialists Van der Moolen (VDM) are up 0.4% at $5.32 and LaBranche (LAB) are down 2.6% at $10.70. 

The street is acting confused here.

Jon C. Ogg
November 29, 2006