Bank shares declined again Wednesday but continued to perform slightly better than the broader market thanks to the Federal Reserves efforts to ensure liquidity, analysts said.
In late afternoon activity, Citigroup Inc. shares were down 2% after trading below their 52-week low at midday Wednesday. J.P. Morgan Chase & Co. was also down 2%, and Bank of New York Co. which was beset last week with operational issues was down 3%, reversing most of a midday loss that came to almost 7%. Bank of New York, whose headquarters at 1 Wall St. is just blocks from the World Trade Center, was also trading below its 52-week low.
Shares of regional banking companies were not faring much better. Late Wednesday, PNC Financial Services Group stock was down 1.5%. Shares of Bank One Corp. were down 1.2%, after also dipping slightly below their 52-week low.
Analysts said investors were still coming to terms with the terrorist attacks. Waves of concern are washing over the bank stocks, said Nancy Bush, an analyst at Ryan Beck & Co. More and more there is a sense that the fundamentals have changed and that we have made a warp-speed leap into a more subdued environment.
Still, bank shares were doing better than the broader markets. The Dow Jones industrial average was down 1.6% after falling about 5% early in the session.The S&P bank index was down 1.3%.
Ms. Bush said the banking industry, with a solid capital base and strong backing from the Fed, seems well positioned to handle the current crisis. They are getting a lift from the liquidity and from the Feds obvious determination, by hook or crook, to keep things afloat, Ms. Bush said.
Bank announcements this week to buy back shares probably gave stock prices a boost as trading resumed after the terrorist attacks, analysts said. You have got to believe repurchase programs helped, said Chris Mutascio, an analyst with Legg Mason Wood Walker.
On Monday banks and other large companies announced share repurchases in an attempt to build faith in the U.S. financial markets.
FleetBoston Financial Corp. kicked off a buyback program on Sunday with the announcement of a $4 billion stock repurchase through 2002. Its stock was trading up 0.2% at midafternoon Wednesday, at $34.63.
In the past banks often started repurchase programs during times of global crises, he said. Stocks could have been lower than they were, Mr. Mutascio said. Im sure [the buyback] buoyed them a little bit.
Bradley Vander Ploeg, an analyst at Robert W. Baird in Chicago, said he believes the repurchase programs have helped in some cases. Banks have been building capital for buying back stock during a crisis or a dark time in the market, he said.
Liz Moyer contributed to this report