Banking stocks had a mixed day Wednesday as regional players rose after an optimistic analyst report and money-center banks fell after another report that JPMorgan Chase & Co.'s revenue could be squeezed by a legislative proposal.
The KBW Bank Index was nearly flat for the second straight day, closing 0.36% higher, at 44.63.
Regional banks enjoyed a modest bounce after a Credit Suisse analyst urged clients to invest in them, saying the category is likely to appreciate as credit-quality measurements improve next year.
The biggest gainers included Fifth Third Bancorp, up 3.24%; BB&T Corp., 2.30%; and First Horizon National Corp., 2.13%.
JPMorgan Chase and other megabanks fell after a Sanford C. Bernstein & Co. analyst said that a congressional bill regarding derivatives trading could cost the New York banking company as much as $3 billion, or half of its annual derivatives trading revenue. JPMorgan Chase is a major player in the derivatives market and has been aggressively pushing back against what it perceives as heavy-handed regulation of the complex financial instruments.
Its shares closed down 0.69%.
Other banks were soft. Bank of America Corp. fell 1.51%, and Wells Fargo & Co., 1.93%; Citigroup Inc. closed flat, at $4.10 a share.
William B. Rutherford, the president of Rutherford Investment Management LLC, said worries over regulation may have hurt the largest banking stocks but that investors also seemed worried about the fallout over the banking sector's exposure to Dubai World's shaky debt.
"There is some concern of Dubai," he said, adding, "Any time you're talking about additional regulation for any industry, it's a negative."
Financial stocks' sluggish performance seemed to be a drag on the entire market, he said.
The Dow Jones Industrial Average fell 0.18%, and the broader S&P 500 Index rose 0.03%.