Bank shares slipped another notch Monday as bond market yields rose.
Investors apparently booked profits while fretting about the lack of merger activity. Large globally oriented banks and well as regional banks traded lower amid a generally lackluster market.
Chase Manhattan Corp.'s stock dropped $2.50, to $82.625, and J.P. Morgan & Co.'s $5.125, to $134.4375. Both have been strong performers recently. Citigroup Inc. was off $1.125, at $73.75, and BankAmerica Corp. $2, to $72.
The Standard & Poor's bank index stumbled 12.09 points, to 707.19. The the broad market Standard & Poor's 500 index rose 3.19 points, to 1360.04,l and the blue-chip Dow Jones industrial average advanced 28.92 points, to 10,718.59.
"The bigger banks had definitely gotten ahead of themselves, so it was not surprising to see some profit taking," said industry analyst Sean J. Ryan of Bear, Stearns & Co. in New York. "Chase, for instance, had been on quite a tear."
The question investors had been asking about these banks, he said, "is whether there is any good news left that is not already priced into these stocks."
But Mr. Ryan said it was less clear why regional banks have not fared well. "There seems to be deep pessimism that there will be many more merger deals or that premiums will be very significant," he said. "I disagree on both counts."
The drying up of dealmaking last fall seems to have "cemented perceptions that year-2000 (computer-related) problems are a serious roadblock," he said. "In fact, it was really a reaction to the collapse in stock prices during the third quarter."
Among the regionals on Monday, Firstar was off $1.3125, at $31.8125, Bank One Corp. $1.125, at $57.25, and Comerica Inc. 25 cents, to $64.375.
Other analysts said a post-earnings-season letdown was under way. "The results are in and the excitement has died down for a while," said Anthony J. Polini of Advest Inc. in Hartford, Conn.
He expects activity to pick up. "Some of these stock are at deep discounts versus the S&P 500," he noted.
"Earnings are over, and we're in the dead period of the new quarter as far as news, unless we get some merger activity," said Michael A. Plodwick of Lehman Brothers in New York "Over the very near term there's just less to drive the stocks.
"Those people who were in for the earnings play have made their trades and are moving on to the next spot for action," he said. That accounts for the price weakness in a company like Firstar, "which had a great quarter."