Banking stocks were flat Monday as investors sat on the sidelines waiting for earnings season to kick into full gear.
The KBW Bank Index rose 0.06%, to 47.03.
William D. Rutherford, president of Rutherford Investment Management in Portland, Ore., said the markets tend to be quiet before earnings season starts.
"There is always the concern and anticipation of what earnings is going to bring — I didn't see any sectors that showed particular strength," he said.
Alcoa Inc. said after the markets closed that it recorded a fourth-quarter loss of $277 million, compared with a loss of $1.2 billion a year earlier. The aluminum producer benefited from higher aluminum prices and improving conditions in the manufacturing industry.
Rutherford said the fourth quarter may have been mixed for U.S. banks, as those with strong trading operations benefited from a rebound in the equities markets while others were hampered with mounting problems in their commercial loan portfolios.
"Commercial loans are a real issue that they have to work through and could affect their profits," he said.
JPMorgan Chase & Co. Chief Executive Jamie Dimon told the House's Financial Crisis Inquiry Commission on Monday that commercial real estate was a "train wreck" that has "already happened," though he was "optimistic" about the future, according to Thomson Reuters.
JPMorgan Chase is scheduled to report earnings Friday. Reuters estimates Chase will report a profit of 62 cents a share. Its shares fell 0.34% Monday.
In a sign that CRE losses are already taking a toll, one of the first large banks to disclose results, Associated Banc-Corp, reported a surprise fourth-quarter loss Monday, citing soaring CRE chargeoffs.
In other banking news, President Obama is weighing a fee on financial institutions to help close the federal deficit while recovering some of the money taxpayers put up to bail out the financial system.
Also, Goldman Sachs downgraded Northern Trust Corp. to "neutral," from "buy," saying its net interest margins could stay depressed through 2010. Its shares fell 2.63%.
In the broader markets, the Dow Jones industrial average rose 0.43% and the Standard & Poor's 500 index rose 0.17%.
It was a mixed day for large and midsize banks.
Bank of America Corp. rose 0.89% and Citigroup Inc. gained 4 cents to close at $3.63. Wells Fargo & Co. fell 0.21%.
Among the regionals, BB&T Corp. was unchanged at $27.34; PNC Financial Services Group Inc. rose 0.28%; Regions Financial Corp. rose 2.27%; SunTrust Banks Inc. rose 1.13%; U.S. Bancorp rose 0.45%; and Zions Bancorp. rose 0.61%.
Comerica Inc. fell 1.07%, Capital One Financial Corp. fell 1.79% and M&T Bank Corp. fell 0.95%.