Bank stocks dipped in light trading Monday, bucking the broader market's march upward, with concerns about the impact of the Treasury Department's extended support of the mortgage finance companies Fannie Mae and Freddie Mac weighing on the rest of the sector.
The KBW Bank Index fell 0.74%, to 43.02, in a slow session that heard little news from the industry.
The Treasury Department announced Thursday that the $200 billion credit lines made available to Fannie Mae and Freddie Mac when the companies were rescued last year by the government — which were to expire at the end of 2009 — would be allowed to increase "as necessary" over the next three years.
This development, intended to support stability in the mortgage market, boosted the shares of the government-sponsored enterprises Monday; Fannie Mae's stock price rose 21%, to $1.27 a share, and Freddie Mac jumped 27%, to $1.60. But investors must sort out what the government's continued support of the companies will mean for foreclosure mitigation, mortgage modifications and related issues that could have implications for other financial sector stocks.
Regional players fared worse than the big banks. Fifth Third Bancorp shares fell 2.54%, to $9.97, and KeyCorp was down 2.08% for the day, to $5.64. JPMorgan Chase & Co. fell 0.41%, to $41.72, and Wells Fargo & Co., 1.26%, to $26.75.
Among the day's gainers, Bank of America Corp. closed up 0.26%, at $15.29, and Citigroup Inc., 1.19%, at $3.39.