Bank stocks fell during a sluggish session Thursday, weighed down by negative analyst reports and a smattering of negative economic data.
The KBW Bank Index shed 1.18%. The broader market fared better, however, with the Standard & Poor's 500 index up 0.25% and the Dow Jones industrial average 0.11%.
Tim Curran, a trader at Regions Financial Corp.'s Morgan Keegan & Co. Inc., said financial stocks continue to suffer at the hands of skeptical investors. "There are still an awful lot of questions out there, and you only need a few headlines to make people reluctant to invest in the sector," he said in an interview Thursday. Mid-August volumes tend, historically, to be low, he said, so it is "hard to get a clear indication where the market is headed."
Regions shares fell 4.7% after Kevin St. Pierre, an analyst at AllianceBernstein LP's Sanford C. Bernstein & Co. LLC, said the Birmingham, Ala., company should raise $2 billion in capital. He cut his 2008 earnings estimate for Regions by 11 cents a share, to $1.35, and his 2009 estimate by 30 cents, to $1.43, due mostly to credit-quality concerns.
Wachovia Corp. shares fell 1.7% after Friedman, Billings, Ramsey & Co. analyst Paul Miller Jr. resumed coverage of the Charlotte company with an "underperform" rating. He believes the company's credit costs will surpass Wall Street expectations because of Wachovia's "outsized exposure" to option adjustable-rate mortgages and residential real estate, he wrote in a note to clients.
Meanwhile, the Conference Board reported Thursday that its monthly survey of economic indicators fell 0.7% last month. Economists had expected a 0.2% decline, according to Thomson Reuters.
Cadence Financial Corp. shares fell 4.9% after the Starkville, Miss., company's board cut its dividend 80%, to 5 cents a share. The dividend is payable Oct. 1 to shareholders of record Sept. 17.
There were some gainers.
Downey Financial Corp. shares rose 7.3%. The Newport Beach, Calif., thrift company, which is struggling with serious credit-quality issues, said it had tapped Paul M. Homan, a former bank examiner at the Office of the Comptroller of the Currency, to sit on its board. "It seems like a good pick in that his experience fits in with what they are trying to work through," S&P credit analyst Robert B. Hoban Jr. said in an interview Thursday.
Other gainers included Whitney Holding Corp. in New Orleans, up 1.8%; UCBH Holdings Inc. in San Francisco, 1.4%; and PNC Financial Services Group Inc. in Pittsburgh, 0.7%.
Decliners included Republic Bancorp Inc. in Louisville, Ky., off 7.4%; Washington Mutual Inc. in Seattle, 4.9%; and Bank of New York Mellon Corp. in New York, 3.1%.