Banks stocks fell along with broader equities Tuesday after a report showed that consumers remain wary of the economy despite encouraging comments from government officials in recent weeks.
The Conference Board's monthly gauge of consumer confidence fell for September, after rising a month earlier, to 53.1. The report took the steam out of early gains, which were temporarily fueled by the Standard & Poor's/Case-Shiller Housing Index, which found home prices rising in 18 of the 20 markets it covers.
"The market had been expecting a 57" from the consumer confidence index, said Frank Barkocy, the director of research at Mendon Capital Advisors. "The shortfall really took the steam out of the stocks, which had responded positively early on."
The KBW Bank Index fell 0.4%. The Dow Jones Industrial average lost 0.5% and the Standard & Poor's 500 index fell 0.2%.
Tim Curran, a bank stock trader at Regions Financial Corp.'s Morgan Keegan & Co. Inc., said it is difficult right now to get investors motivated to buy into the sector. "I don't think there are a lot of people out there with a ton of conviction," he said.
"There is nothing that says we're out of the woods yet," Curran added. "Those who are out there investing are in their own mind trying to decipher what are the quality names out there."
Friedman, Billings, Ramsey Group Inc. analyst David Rochester took a shot at distinguishing among regional banks Tuesday, changing several ratings in moves that appeared to influence trading.
Rochester raised his ratings for Zions Bancorp. and Huntington Bancshares Inc. to "outperform" from "market perform" based on expectations that the companies' could have strong earnings over the long term. He boosted his ratings for City National Corp., PNC Financial Services Group Inc., U.S. Bancorp and New York Community Bancorp to "market perform" from "underperform."
Huntington shares rose 4.8%, PNC shares rose 3.1%, New York Community shares rose 2.3% and City National shares rose 0.8%. Still there was inconsistency, as Zions shares were unchanged and U.S. Bancorp fell 2.2%.
Synovus Financial Corp. shares fell 4.4% after Rochester cut his rating for the company to "underperform" from "market perform." He expressed concerns over the risk of steep losses in the company's construction and development loan portfolio.
JPMorgan Chase & Co. shares edged up 0.2%. The company said it had begun succession planning for its chairman and chief executive, James Dimon. Notably, JPMorgan Chase named Jes Staley CEO of its investment bank; a source close to the company said Staley is considered "the front-runner" to replace Dimon, who has no immediate plans to retire or step down.
Other gainers included Amcore Financial Inc., which rose 5.9%; First Midwest Bancorp Inc., 5%; and Citigroup Inc., 2.8%.
Decliners included Sterling Bancshares Inc., which fell 2.4%; Marshall & Ilsley Corp., 2.2%; and East West Bancorp Inc., 2.1%.