Shares of Chase Manhattan Corp. slid 1.45% Friday after Sanford C. Bernstein & Co. cut second-quarter and full-year earnings estimates for it because of expectations that venture capital revenue growth would slow.
Analyst Ronald Mandle cut his second-quarter earnings estimate to $1.30 a share, from $1.60, and took down his 12-month estimate by the same amount, to $6.10. He maintained his "outperform" rating on the stock.
Chase's stock fell $1.0625 a share, to $72.1875.
Meanwhile, shares of many bank stocks held their own despite government data showing yet a new decline in the nation's unemployment rate, to 3.9%, a 30-year low, and a larger-than-expected rise in nonfarm payrolls. The data intensified market fears that the Federal Reserve would raise interest rates as much as 50 basis points at its next policy-setting meeting, May 16.
"Today's numbers show that we are in an inflationary trend," said Michael Clark, head trader at Credit Suisse First Boston. "People are beginning to realize the level of risk involved in earning 30% to 40% on their money. Investors will have to move into some value areas."
The American Banker index of the 50 largest banks fell 0.01%, and its index of 225 big banks rose 0.30%.
The decline for Chase and other money-center companies with strong venture capital units is a reversal of fortune for the group, which had outperformed other financial stocks until the recent slide in tech stocks, which have also been victims of the rising interest rate environment. In the past month, Chase shares have fallen 15%, and Bank of America Corp. and FleetBoston Financial Corp. have shed 11% of their market value, according to Ryan, Beck & Co. The average banking company has been fallen 8% in the same period.
Mr. Mandle said that Chase Capital Partners had an unrealized capital loss of $900 million in its portfolio of publicly traded stocks by mid-April because of the decline in the tech sector. It reported $500 million of realized and unrealized gains in the first quarter, down from $1.3 billion in the fourth quarter.
Among the biggest banking companies, Chase, which last year derived 12% of its total revenue from venture capital, is the most reliant on the business, according to Sanford C. Bernstein. The firm put Wells Fargo & Co.'s share of revenue from venture capital at 6.4%, First Union Corp.'s at 4.2%, FleetBoston's at 3.9%, and Bank of America's at 2.7%.
